India pivots to Russian crude as Hormuz Strait blockade chokes supply: Report
With Strait of Hormuz almost closed, Delhi risks US trade tariffs to secure 1.4 million barrels of diverted Russian oil to preempt a domestic energy crisis
In a sharp reversal of recent trends, at least three tankers carrying sanctioned Russian oil have reportedly diverted from East Asia to Indian ports this week.
India has pivoted back to increasing its intake of Russian crude, as the escalating US-Israel-Iran conflict threatens to choke the Strait of Hormuz, jeopardising critical Middle Eastern supplies, said reports. According to a report in Bloomberg, Indian refiners are prioritising supply security over Western diplomatic pressure not to buy oil from Russia.
India imports 88 per cent of its crude oil needs and roughly half of its natural gas requirement. These mostly come via the Strait of Hormuz, a narrow shipping lane between the Persian Gulf and the Gulf of Oman that handles roughly 20 per cent of global oil and LNG (Liquefied Natural Gas).
Russia steps forward
Global oil and gas prices too have surged after Iran has virtually blocked the Strait of Hormuz. Any prolonged instability in West Asia is set to be detrimental to India's national interests as the region remains a major source of New Delhi's energy security.
Meanwhile, Russian Ambassador Denis Alipov told the media on Thursday (March 5) that Russia is always been open to supplying crude oil to India, amid increasing concerns over spiralling prices of petroleum products in view of the West Asia crisis.
Also read: Strait of Hormuz crisis: Will India turn back to Russia for oil?
"We have been open to supplying crude oil to India," Alipov told reporters while responding to a question on Russian crude oil supplies to India in view of the West Asia crisis.
Tankers diverted to India
The Bloomberg report said two tankers carrying around 1.4 million barrels of Urals oil combined, headed farther east at first, are now expected to discharge at Indian ports this week, according to ship-tracking data from Kpler and Vortexa.
Urals, which loads in the Baltic and Black Seas, was previously very popular with Indian refiners, but flows had slowed sharply this year due to US pressure on New Delhi to stop buying it.
Although India, which imports nearly 90 per cent of its crude requirements, had recently shifted toward Middle Eastern sources to diversify away from Russia, security priorities have forced a strategic reversal. To preempt potential supply shortages amid unabated regional tensions, New Delhi is once again leaning on Moscow to ensure national energy security.
The article further quoted ship-tracking data and port agent reports that confirmed the arrival of two major Russian oil cargoes at opposite ends of the Indian coastline this week. The Odune, a Suezmax-class vessel carrying 730,000 barrels of Urals crude, reached the Paradip port on India’s east coast on Wednesday. While the vessel is currently at anchor, it remains unclear whether discharge operations have commenced.
Simultaneously, the Matari, an Aframax tanker transporting over 700,000 barrels, is scheduled to make landfall at Vadinar in western India on Thursday. These synchronised arrivals at key refining hubs in Odisha and Gujarat signalled a coordinated effort by Indian processors to replenish stockpiles as Middle Eastern supply lines remain severed.
Also read: Strait of Hormuz closure: India's 100 mn barrel crude stocks could cover 40-45 days
Indri, a Suezmax in the Arabian Sea that’s signalling it’s heading to Singapore, made a sharp turn north this week toward India with about 730,000 barrels of Urals on board, ship-tracking data showed. All three vessels, Odune, Matari and Indri, were placed under sanctions by the UK and the European Union last year.
In India's national interests
US President Donald Trump, while announcing a trade deal with New Delhi last month, claimed India has agreed not to procure crude oil from Russia.
In an executive order, Trump had rolled back an additional 25 per cent tariffs on India that he imposed in August last for India's procurement of crude oil from Russia. In the order, the US said it would monitor whether India resumed Russian oil purchases directly or indirectly and that would determine whether a 25 per cent tariff would again be re-imposed.
India has been maintaining that it will procure oil from multiple sources and diversify them to ensure stability in the supply chain with national interests remaining the "guiding factor" for the procurement.