Indian refiners have significantly diversified their crude oil sourcing following disruptions in Middle East supplies caused by the Israeli-US war on Iran. According to reports from Business Standard, refiners in the world's third-largest oil importer and consumer raised imports from Venezuela, Brazil, Angola and Nigeria in April and May to compensate for the shortfall, while continuing to purchase Russian oil. This strategic pivot represents a substantial shift from the Middle East, which had been the primary source of crude until the conflict began at the end of February. External Affairs Minister S. Jaishankar reaffirmed on Sunday that India will continue to pursue diversified, dependable and affordable energy supplies to safeguard its energy security from geopolitical disruptions, emphasizing the importance of multiple sources, large sources, dependable sources, and cheap sources for energy security.
While global oil supply remains stable, Goldman Sachs warns that fuel buffers are depleting, raising risks to aviation and industrial supply chains. According to Goldman's analysis, global commercial refined product stocks have fallen to about 45 days of demand, down from around 50 before the recent disruption, compared to roughly 101 days of demand for total global oil stocks. The shortages are particularly acute in specific refined products, especially jet fuel, petrochemical feedstocks like naphtha, and liquefied petroleum gas used to make plastics and chemicals. Inventories of naphtha — a critical input for plastics and industrial chemicals — have fallen significantly, including a 72% drop in UAE Fujairah storage and a 37% fall in northwest Europe's Amsterdam-Rotterdam-Antwerp hub since late February. As per Goldman Sachs, Asia outside China and parts of Europe appear particularly exposed to the shortages in refined fuels, with South Africa, India, Thailand, and Taiwan among the more vulnerable markets.
The supply disruptions have been particularly acute for Gulf producers, with India skipping purchases from Iraq as exports were halted last month. As reported by Business Standard, the country received Iranian oil after a gap of seven years following a temporary waiver granted by Washington to help stabilise global oil prices. However, New Delhi reduced imports from Russia by about 29.4 per cent from March to 1.6 million barrels per day as Nayara Energy shut its 400,000-bpd refinery for maintenance, according to preliminary data from Kpler. Jaishankar noted that ensuring accessible and affordable energy for India's 1.4 billion people remained the government's prime objective, highlighting the critical importance of energy security for the world's most populous nation.
Overall, India imported 4.57 million bpd oil in April, unchanged from March, but down 15.5 per cent from a year earlier, according to data from Kpler. The UAE and Saudi Arabia, the only Gulf producers with pipelines that export crude bypassing the Strait of Hormuz, saw their imports rebound significantly. Imports from the United Arab Emirates rebounded in April to 669,700 bpd from 230,600 bpd in March, while intake of Saudi Arabian oil stayed at about 619,500 bpd. The UAE and Saudi Arabia are the only Gulf producers with pipelines that export crude bypassing the Strait of Hormuz, while Kuwait, Iraq, Qatar, and Bahrain rely on the waterway for shipments.
The share of the Organization of the Petroleum Exporting Countries, including the UAE as its member during the month, in India's imports rose to 45.2 per cent in April from about 30 per cent in March, as reported by Business Standard. The UAE exited OPEC in May, freeing it from oil output quotas. Higher imports from the UAE helped arrest a decline in the Middle East's share of India's imports, while the share of Russian oil declined to about 35 per cent from nearly 50 per cent. In May, India is due to get about 1.9 million bpd of Russian oil and about 41,000 bpd of Iraqi oil, according to preliminary data from Kpler. Jaishankar described the United States as a 'very significant and reliable source of energy' for India, emphasizing the importance of diversified energy relationships.
Russia remained India's top oil supplier, followed by the UAE and Saudi Arabia, with Brazil as the fourth-largest supplier and Venezuela ranking fifth. However, Venezuela is on course to become the fourth-largest supplier in May, according to Kpler data. This diversification strategy demonstrates India's ability to adapt its crude oil sourcing amid geopolitical tensions, with the country maintaining its position as a major global oil consumer despite supply chain challenges. The diversified supplies are 'at the heart of energy security for India', as emphasized by Jaishankar, reflecting the country's strategic approach to energy independence amid ongoing regional tensions.
