India Reroutes Crude Supply Chains to Mitigate Middle East Conflict Risks
As tensions in the Middle East continue to escalate, India is proactively diversifying its crude oil import sources to safeguard against potential supply disruptions. Indian refiners are now securing additional supplies from the United States, Russia, and West Africa, ensuring uninterrupted fuel imports to meet domestic demand, according to industry officials and analysts.
Strategic Shift Away from Conflict Zones
India, which relies on imports for approximately 88% of its crude oil, has historically depended heavily on the Middle East, with about half of February's supplies transiting through the Strait of Hormuz. This narrow sea route between Iran and Oman has become a flashpoint due to recent military actions, including strikes by the US and Israel on Iran and retaliatory attacks by Tehran. These events have heightened regional tensions, effectively stalling tanker movements through this critical channel.
A senior oil ministry official stated, "Non-strait sources are fully operational, and we are sourcing more supplies from non-conflict zones." Notably, the proportion of crude from non-Strait sources increased from 60% last year to 70% following the escalation of the Middle East conflict.
Expanding the Oil Basket: Russia, West Africa, and Beyond
Indian refiners are broadening their procurement strategies to include regions such as West Africa, Latin America, and the United States. In a significant development, the US Treasury recently issued a 30-day waiver, valid until April 5, allowing the delivery of sanctioned Russian crude already en route to India. This waiver permits the sale and discharge of Russian-origin crude loaded on or before March 5, even for vessels under certain sanctions.
Industry sources reveal that approximately 120 million barrels of Russian crude are currently in transit, with 15 million barrels near India in the Arabian Sea and Bay of Bengal, and an additional 7 million barrels near Singapore. Major players like Reliance Industries, Hindustan Petroleum Corporation Ltd, and HPCL-Mittal Energy Ltd have resumed purchases of Russian crude after a temporary halt due to US sanctions on producers like Rosneft and Lukoil.
Before sanctions were imposed in October 2025, Reliance Industries was the largest buyer of Russian crude, importing over 500,000 barrels per day under a long-term agreement with Rosneft. India's imports from Russia have adjusted, with February 2026 seeing around 1.04 million barrels per day, down from 1.6–1.8 million barrels per day in 2023–2025.
Inventory and Supply Security Measures
To bolster supply resilience, Indian refiners have postponed planned maintenance and are operating at normal processing rates to build reserves. The oil ministry official emphasized, "We are in a very comfortable position regarding crude and finished products." India's combined inventory can meet demand for up to 50 days, with onshore storage holding about 144 million barrels—sufficient for roughly 30 days at 2025 import levels—and supplies being continuously replenished.
Strategic Petroleum Reserves provide an additional 9.5 days of net import coverage, while state-run companies maintain stocks covering 64.5 days, resulting in a total storage capacity equivalent to approximately 74 days of net imports.
Economic Implications and Cost Concerns
Despite physical ability to secure crude from alternative sources, analysts warn of potential cost increases. Factors such as higher crude prices, longer shipping routes, elevated freight charges, and increased insurance premiums could drive up expenses. International crude prices have surged above $92 per barrel from around $70 following the US and Israel strikes on Iran in late February, while LNG prices have more than doubled to $24–25 per million British thermal units.
Higher import costs may widen India's fiscal deficit or lead to consumer price hikes. Analysts estimate that every $10 increase in crude prices could add 20–25 basis points to the consumer price index if passed on to consumers. As the world's third-largest crude importer, India's exposure to the Middle East remains significant, with February 2026 imports from Iraq, Saudi Arabia, the UAE, Kuwait, and Qatar totaling 2.8 million barrels per day, accounting for 53% of total imports.
Global flows through the Strait of Hormuz were around 15 million barrels per day of crude and 5 million barrels per day of oil products in 2025. India's reliance on this route has fluctuated, with exposure at about 41% in 2025 but increasing recently as refiners reduced Russian crude purchases. Imports from Russia averaged 1.15 million barrels per day in early 2026, compared to approximately 1.7 million barrels per day in 2025.
