Indian refiners line up alternative crude supplies amid Middle East tensions

India’s state-run and private oil refiners are aggressively recalibrating their procurement strategies, securing additional crude cargoes from the United States, Russia, and West Africa. The move comes as escalating military tensions in the Middle East—specifically involving the U.S., Israel, and Iran—threaten to disrupt the global energy artery, the Strait of Hormuz.

India, which imports nearly 88% of its oil requirements, is particularly vulnerable to Persian Gulf instability. In February 2026, roughly half of India's imports transitioned through the Strait of Hormuz . However, as tanker movements slow following retaliatory strikes in the region, New Delhi has moved to shield its domestic economy from supply shocks.

According to Petroleum Ministry officials, India has successfully shifted its reliance away from conflict-prone zones. "Non-Strait sources accounted for about 60% of our crude supplies in 2025. Following the recent escalation, this share has climbed to nearly 70% ," a senior official confirmed.

Beyond diversification, domestic refineries have postponed scheduled maintenance shutdowns to maintain steady processing levels. This "inventory-first" approach aims to build a robust buffer of petrol, diesel, and aviation fuel. Currently, India holds approximately 144 million barrels in onshore storage (30 days of coverage), supplemented by 9.5 days in Strategic Petroleum Reserves (SPR) and 64.5 days of stock held by state-run companies.

A significant factor in India’s current stability is a temporary waiver from the U.S. Treasury Department. This exemption allows for the delivery of Russian crude loaded before March 5, 2026, even involving entities like Rosneft and Lukoil t hat faced sanctions in 2025.

Industry estimates suggest nearly 120 million barrels of Russian crude are currently at sea. Of this, 15 million barrels are positioned near Indian waters in the Arabian Sea and the Bay of Bengal. Major players like Reliance Industries and HPCL-Mittal Energy, who had briefly halted Russian purchases, have reportedly resumed buying under this window.

To bypass the Middle East friction, tankers are increasingly opting for l onger, costlier routes. Shipments from the U.S., Brazil, and West Africa are being routed across the Atlantic and around the Cape of Good Hope , completely avoiding the Strait of Hormuz.

While physical supply remains secure, analysts warn of a "price shock." Global crude has surged to over $92 per barrel , up from $70 in early February. These higher prices, combined with soaring insurance premiums and freight costs, threaten to widen India’s current account deficit. Experts estimate that every $10 increase in crude prices could add 20–25 basis points to India's Consumer Price Index (CPI) if the costs are passed to the pump, posing a fresh challenge to inflation management in 2026.