India plugs oil gap as Middle East supplies sink

India has ramped up purchases of Russian oil and revived alternate supplies from Africa, Iran, and Venezuela to blunt a sharp crude shortfall from the Middle East crisis-ridden region. India, the world's third-largest oil buyer, normally sources about half of its crude through the Strait of Hormuz, a vital waterway that has seen minimal traffic since US and Israel attacks on Iran in February 2023. India’s heavy import dependence, combined with modest oil reserves compared to major consumers like China, has prompted analysts to warn that India could be among the most vulnerable to sudden oil price hikes. However, India has so far avoided petrol shortages seen in neighboring nations. Ship-tracking and import data show that India has partially plugged the gap by turning to old allies, expanding promising ties, and reviving suppliers it had not tapped in years. The biggest backstop has been Russian crude, with Indian refiners importing an average of nearly 1.98 million barrels per day (bpd) in March—a sharp increase from previous months. Analysts attribute this surge to a temporary US waiver covering Russian oil already at sea. India likely purchased an additional 60 million barrels of Russian oil through April. Other markets have also aided India. Imports from Angola averaged 327,000 bpd in March, nearly three times what India received in February. African crude purchases were made before US strikes on Iran and have proven useful. Crude from Iran and Venezuela began arriving in April, with imports averaging 276,000 bpd from Iran and 137,000 bpd from Venezuela. Despite diversification, challenges remain. India’s overall crude imports fell in March to 4.5 million bpd from 5.2 million in February. Analysts caution that African crudes can only partially backfill Middle Eastern supply due to crude slate mismatches. Higher prices—ranging between $5 and $15 above Brent—pose another hurdle. While the government has cut excise duties on fuel, analysts warn prices could rise by up to 28 rupees (30 cents) per litre post-state elections. The oil ministry denies imminent price hikes, stating that state oil firms have taken steps to insulate citizens from steep international price increases.