India's crude oil imports have largely recovered to pre-conflict levels despite months of disruptions in West Asia, with refiners successfully diversifying supplies by increasing purchases from Russia, the United States, Oman, West Africa and South America, according to an HSBC Global Research report.
Rebound in Imports
"After a dip in March, Indian crude imports have broadly returned to pre-conflict levels as refiners replaced West Asia supplies with alternatives from Russia, the US, Oman, West Africa and South America," the report said. The rebound comes after the Strait of Hormuz crisis disrupted Gulf supplies, prompting Indian refiners to source from alternative producers.
Diversification Strategy
According to HSBC, Russia continues to remain an attractive supplier for Indian refiners as its crude is competitively priced. "Russian oil is trading at a small discount to Brent, making it attractive to Indian refiners." The report adds that Russian export availability has improved after Ukrainian attacks on Russian refineries curtailed domestic processing, allowing more crude to reach export markets.
| Source Region | Key Attribute |
|---|---|
| Russia | Discount to Brent; improved export availability due to domestic refinery curtailments |
| United States, Oman, West Africa, South America | Alternative sources replacing Gulf supplies |
| West Asia (Gulf) | Recovering exports after Strait of Hormuz reopening, but limited near-term demand from Asian refiners |
Indian refiners have also diversified to Oman, West Africa, and South America to reduce dependence on Gulf producers. The report notes that refiners across Asia have already secured cargoes for July and August and are entering scheduled maintenance periods, limiting immediate demand for additional spot cargoes.
Outlook and Oversupply
While Gulf oil exports are recovering following the reopening of the Strait of Hormuz, HSBC does not expect Asian refiners, including those in India, to significantly increase purchases from the region in the near term. The report points to India's cautious approach towards Iranian crude despite a temporary easing of US sanctions. "Indian refiners are cautious about buying from Iran unless US sanctions waivers are extended beyond August."
HSBC believes the reopening of the Strait of Hormuz has created a temporary oversupply of West Asian crude in global markets as stranded cargoes are being released faster than refiners can absorb them. However, it expects this "mini-glut" to fade over the coming weeks as inventories are rebuilt and strategic petroleum reserve releases come to an end.
The report suggests that diversified sourcing has helped India maintain crude supplies without significant disruption, reducing dependence on Gulf producers during the crisis. The country's ability to quickly switch to discounted Russian barrels and other Atlantic Basin supplies has enabled refiners to keep imports steady while avoiding exposure to supply uncertainties in West Asia. As Gulf markets stabilise, India is expected to continue balancing imports across multiple suppliers based on price competitiveness and geopolitical risks.
For commodity traders and analysts, the key takeaway is that India's crude import strategy has added flexibility, which may dampen price spikes from future Gulf disruptions. The temporary oversupply from the Strait of Hormuz reopening could weigh on Near-term crude benchmarks, but the fading mini-glut and ongoing maintenance seasons suggest balanced markets ahead.
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