Indian Refiners Secure Russian Oil Amid Supply Disruption from Iran Conflict
Indian refiners are actively purchasing significant volumes of Russian crude oil amid disruptions in their oil supply chain from the Middle East due to ongoing conflicts. Sources indicate that approximately 20 million barrels of prompt Russian oil are being bought by Indian state-owned refiners navigating this supply crunch.
US Waiver Enables Russian Oil Purchases
On March 5, the U.S. Treasury Department issued a 30-day waiver to allow India to acquire Russian oil that has been stranded at sea. Treasury Secretary Scott Bessent emphasized that this is a temporary measure. It aims to facilitate continued oil flow into the global market while minimizing financial benefits for the Russian government.
- India depends on the Strait of Hormuz for about 40% of its oil imports.
- Current crude stockpiles in India suffice for only about 25 days of demand.
- This waiver reflects the U.S. government’s response to ensure energy security for India during the ongoing Middle East conflict.
Impact of the Iran Conflict on India’s Oil Supply
The conflict in the Middle East has forced Indian refiners to reassess their oil sourcing strategies. These refiners had been reducing their purchases of Russian oil since January due to pressure from Washington to limit transactions with Moscow.
Despite previous reductions, Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, and Mangalore Refinery and Petrochemicals are now exploring immediate delivery options from traders for Russian crude.
Current Situation for Indian Refiners
Reports indicate that Indian refiners are now turning back to Russian oil. Prices for Russian Urals have risen, trading at a premium of $4-$5 per barrel to Brent for deliveries expected in March and early April. In contrast, prices were discounted by about $13 per barrel just a month prior.
- State refiners had last received Russian crude in November.
- Before the conflict began on February 28, HPCL purchased two Russian cargoes at a significant discount.
- Reliance Industries is also reportedly seeking opportunities to buy Russian oil as market conditions evolve.
As Indian refiners adapt to the changing geopolitical landscape, the focus has shifted towards securing prompt availability of crude oil, highlighting the ongoing tension between energy needs and diplomatic pressures.
