India's crude oil imports have bounced back to near pre-conflict levels despite prolonged disruptions in the Middle East, as refiners adjusted their sourcing mix and leaned more on alternative suppliers, according to an HSBC Global Research report.
Sourcing Shift Amid Strait of Hormuz Crisis
HSBC reported that after a dip in March, Indian crude imports broadly returned to pre-conflict levels as refiners replaced Middle East supplies with alternatives from Russia, the United States, Oman, West Africa, and South America. The report highlighted that Indian refiners managed to offset the impact of the Strait of Hormuz crisis by cutting reliance on traditional Gulf suppliers.
"After a dip in March, Indian crude imports have broadly returned to pre-conflict levels as refiners replaced Middle East supplies with alternatives from Russia, the US, Oman, West Africa and South America," the report said.
A table summarizing the alternative sourcing regions is provided below:
| Alternative Supplier Region | Key Characteristics |
|---|---|
| Russia | Pricing edge, discount to Brent; increased exports after Ukrainian strikes on domestic refineries |
| United States | Part of Atlantic Basin supply chain |
| Oman | Regional supplier outside the Strait of Hormuz |
| West Africa | Atlantic Basin crude |
| South America | Atlantic Basin crude |
Russia's Pricing Advantage and Ukrainian Impact
HSBC noted that Russia continues to be a preferred supplier for India due to its pricing edge. "Russian oil is trading at a small discount to Brent, making it attractive to Indian refiners." The report also pointed out that Russian crude availability has increased after Ukrainian strikes on refineries reduced domestic processing, allowing more oil to be diverted to export markets.
Gulf Supply Recovery and Asian Caution
Even though Gulf exports are recovering following the reopening of the Strait of Hormuz, HSBC expects Asian refiners, including India, to hold back from significantly ramping up purchases from the region in the immediate term. The report says refiners across Asia have already covered cargo requirements for July and August and are currently entering maintenance schedules, which is limiting spot buying activity.
On Iran, the report says Indian refiners remain cautious despite a temporary easing in US sanctions. "Indian refiners are cautious about buying from Iran unless US sanctions waivers are extended beyond August."
Temporary 'Mini-Glut' and Outlook
HSBC points out that the reopening of the Strait of Hormuz has created a short-term surplus of Middle Eastern crude in global markets, as previously stranded shipments are being released faster than they can be absorbed. However, the report described the situation as a temporary "mini-glut" that will ease as inventories are rebuilt and strategic petroleum reserve releases wind down.
Overall, HSBC said India's diversified sourcing strategy has helped ensure steady crude inflows despite geopolitical disruptions. By shifting quickly towards discounted Russian barrels and other Atlantic Basin supplies, refiners have been able to maintain import stability while reducing exposure to Middle East supply risks. The report added that India is likely to continue balancing its crude imports across multiple regions, guided by price and geopolitical considerations as Gulf supply conditions stabilise.
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