India's crude oil imports jumped from Russia, and imports from UAE also remained near-record levels as the focus remained on boosting imports ahead of the reopening of the Strait of Hormuz.
India imported an average of 2.66 million barrels per day of crude oil from Russia in June compared to 1.91 million barrels per day in May as per latest data, this makes Moscow the country’s largest oil supplier, at least as of now (as per June monthly data). Imports from the United Arab Emirates were at 6,36,000 barrels per day in June, through June 19, marginally below the record 6,44,000 barrels per day imported in May as per Kpler data.
India is the third-largest energy importer in the world and relies on the Gulf for supplies of crude oil, LNG, LPG and supplies were disrupted after Iran shut the Strait of Hormuz due to the West Asia war. Analysts believe if due to geopolitical tensions, the Strait of Hormuz was to remain shut, India could witness a massive disruption as around 50 percent of the country's oil imports come from Gulf producers. They also feel the immediate impact could be one of the spike in crude oil rates and freight and insurance as well as fuel costs. Therefore India's move to diversify oil supplies is the need of the hour some experts believe.
According to Sumit Ritolia, Senior Manager-Modelling at Kpler, a reopening of the Strait of Hormuz is expected to provide the quickest relief to India's liquefied petroleum gas (LPG) supplies, while crude oil and liquefied natural gas (LNG) imports are likely to see a more gradual normalisation as the country has already adapted to months of disruption through diversification and alternative supply routes. Ritolia said, "reopening of the Strait of Hormuz would represent a major milestone for global energy markets, but the impact on India is likely to vary significantly across commodities.
While India remains one of the largest importers of Middle Eastern hydrocarbons (crude, LPG, and LNG), crude and LNG imports have proven relatively resilient throughout the disruption, unlike LPG, which has been the most severely affected. Under our base case of a gradual reopening from early July, the initial focus will be on clearing trapped cargoes and restoring shipping flows before Gulf exporters can materially increase exports."