Why India is turning to Russian oil amid Israel-Iran conflict?

New Delhi: India has sharply increased its imports of Russian crude oil in June, surpassing combined purchases from traditional Middle Eastern suppliers, including Saudi Arabia and Iraq, as regional tensions spike following coordinated US and Israeli strikes on Iran’s nuclear facilities.

According to preliminary data from energy analytics firm Kpler, Indian refiners are set to import between 2 and 2.2 million barrels per day (bpd) of Russian crude this month -- the highest volume in two years. This exceeds total imports from Iraq, Saudi Arabia, the UAE, and Kuwait, traditionally India’s key suppliers.

In May, Russian oil imports stood at 1.96 million bpd. Imports from the United States have also surged, reaching 439,000 bpd in June, up from 280,000 bpd in May. By contrast, full-month projections for crude from the Middle East have dipped to around 2 million bpd, lower than the previous month’s figures.

The shift in sourcing comes amid market volatility triggered by Israel’s June 13 airstrikes on Iran’s nuclear infrastructure, followed by U.S. military strikes on three Iranian sites early Sunday -- a move that has further raised tensions in the region and fuelled concerns over global energy security.

India, the world’s third-largest crude importer, brings in roughly 5.1 million barrels per day of oil to meet domestic demand. Traditionally reliant on Middle Eastern suppliers, India pivoted towards Russian oil after the invasion of Ukraine in 2022, lured by discounted rates following Western sanctions on Moscow. Russia’s share of Indian crude imports has since ballooned from less than 1% to over 40%.

Strait of Hormuz risks

One of the most pressing concerns is the potential disruption of shipments through the Strait of Hormuz, the strategic waterway through which around 20% of the world’s oil and a significant portion of global liquefied natural gas (LNG) exports pass.

Iran has threatened to close the Strait in response to Israeli and American military action. While analysts view a full blockade as unlikely, even temporary disruption would have wide-ranging consequences. India imports roughly 40% of its crude and half its LNG through this narrow channel, making it particularly vulnerable to any escalation.

“Shipowners are increasingly hesitant to send empty tankers into the Gulf,” said Sumit Ritolia, Lead Research Analyst at Kpler. “The number of such vessels has fallen sharply, and Gulf-bound signals from the Gulf of Oman have halved. This indicates that crude loadings from the Middle East could tighten in the near term.”

Risk management and diversification

India’s current oil sourcing strategy reflects a deliberate shift towards resilience. Russian grades such as Urals, ESPO, and Sokol are logistically independent of the Strait of Hormuz, typically routed through the Suez Canal, Cape of Good Hope, or Pacific Ocean.

In addition, refiners have enhanced operational flexibility, enabling them to process a wider range of crude grades and adapt quickly to shifting market dynamics. Imports from West Africa, Latin America, and the United States, though costlier, are increasingly seen as viable alternatives.

“If conflict deepens or the Strait sees even short-term disruption, Russian oil will likely take on an even greater share in India’s import mix,” Ritolia noted. “The US, Nigeria, Angola, and Brazil may also emerge as fallback suppliers, despite higher freight costs.”

India also maintains strategic petroleum reserves covering 9-10 days of consumption, which can be tapped to offset temporary supply disruptions.

Diplomatic implications

According to Kpler, a full-scale closure of the Strait remains unlikely due to the severe diplomatic and economic costs for Iran. China, Iran’s top oil buyer, would be significantly affected, and Iran’s own exports via Kharg Island -- which handles 96% of its oil shipments -- would also be blocked.

Moreover, Tehran has made considerable efforts in recent years to normalise ties with Gulf neighbours such as Saudi Arabia and the UAE. Any action jeopardising their oil exports would threaten these fragile diplomatic gains and invite international military retaliation.

Still, with regional hostilities escalating and the risk of isolated sabotage or limited disruption rising, India’s proactive diversification and strategic stockpiling may prove critical in shielding its energy security from the fallout of the growing Middle East crisis.