India’s crude oil imports in August face a fresh risk from Russia following Ukrainian attacks on key export infrastructure, according to The Hindu Business Line. Mounting uncertainty over loadings from the Black Sea port of Novorossiysk, combined with continued threats to Red Sea shipping, could inflate India’s oil import bill. S&P Global Commodity Insights reported that Brent crude futures rose above $100 per barrel on July 23.
Russian Supply Disruption
Russia has emerged as India’s largest crude supplier over the past three years, accounting for up to 50% of imports as refiners relied on discounted Urals crude after Western sanctions, the report noted. Any disruption carries outsized implications. A trade source told The Hindu Business Line: “crude oil (Urals grade) loadings from Novorossiysk port considering attacks by Ukraine on the Sheskharis terminal. Besides, traders are not offering discounts for September loadings. So, barrels will be there, but there will be a price.”
According to Kpler, Russia’s crude exports in July have already declined by around 400,000 barrels per day month-on-month. Sheskharis, Russia’s largest crude export terminal, accounts for nearly 20% of the country’s seaborne crude shipments.
Red Sea Threat
The second variable is the continuing threat by Houthi rebels to Saudi Arabian crude exports transiting the Bab el-Mandeb strait, according to the same source. The threat has already impacted supply, with Saudi Arabia using Egypt’s Sidi Kerir terminal on the Mediterranean coast, which increases costs.
Equirus Securities reported that tankers can avoid Bab el-Mandeb by taking alternative routes through the Suez Canal and the Mediterranean, but doing so could add nearly a month to voyage times, reducing tanker availability and raising freight and insurance costs.
| Item | Before Conflict | Current |
|---|---|---|
| Freight & insurance per barrel | $4–5 | $13–15 |
India’s Import Strategy
An official with a domestic refiner said the expectation is that both Russian and Saudi barrels will continue to be available, but logistics are becoming increasingly “tricky”. Saudi Arabia usually supplies crude through VLCCs, but bypassing the traditional Red Sea route and exporting via Sidi Kerir adds to voyage time and transportation costs.
Kpler stated that if Red Sea transit remains uninterrupted, Indian refiners will continue to have an important supply buffer through Saudi Arabia’s East-West pipeline to Yanbu, which has recently supplied around 300,000–500,000 barrels per day of crude. However, if the security situation deteriorates and Red Sea imports become unavailable during August, refiners will need to replace those barrels from alternative sources.
Price Outlook
The concern for India is less about physical availability than pricing, according to sources. If Russian exporters trim discounts or shipments, Indian refiners will either have to pay more for Russian crude or replace barrels with costlier cargoes, pushing up procurement costs. The weak rupee against the US dollar exacerbates the impact.
S&P Global Commodity Insights linked the Brent crude price rise above $100/bbl to mounting concerns over disruptions to Red Sea shipping. The combined effect of slower deliveries, higher freight costs, and shrinking discounts on Russian crude could inflate India’s oil import bill, particularly important given India’s heavy reliance on imports and the rupee weakness.
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