India seeks US, Russia oil as Middle East tensions push prices over $92

India is now paying over $92 a barrel for oil, a big jump from $70 just weeks ago, because of Middle East problems.
By Newsroom | Energy, India |

NEW DELHI – Indian refiners are actively seeking oil from non-Iranian sources, including the United States, Russia, and West Africa. This shift comes as international crude prices surge past USD 92 a barrel, a significant jump from approximately USD 70 when the current Middle East conflict escalated on February 28. The disruption directly impacts roughly half of India's February crude imports, which previously transited the Strait of Hormuz, a vital global energy artery.

Refiners are adjusting operations to build crucial stockpiles. Planned maintenance shutdowns are being postponed, and processing rates are being kept at normal levels. This strategy aims to create buffers that can sustain the country's fuel demands in the short term. India, heavily reliant on imports for its energy needs, sources about 88 percent of its crude oil requirements from abroad.

The US Treasury's 30-day waiver on sanctioned Russian oil, if already loaded onto vessels, has also opened up an additional supply channel. This move by the US, alongside the broader scramble for alternative sources, highlights the geopolitical calculus influencing global energy flows.

Read More: LPG Gas Shortage Stops Kozhikode Crematoriums from Working

India Taps Alternative Crude Supplies As Iran Conflict Drags On - 1

Industry officials and analysts point to the ongoing Middle East conflict as the primary driver for these preemptive measures, indicating a readiness for a prolonged period of instability.

SUPPLY LINES UNDER STRAIN

India's reliance on the Strait of Hormuz, a narrow passage between Iran and Oman, means a substantial portion of its February crude imports were funneled through this potentially volatile chokepoint. With conflict now directly affecting this route, refiners are casting a wider net. Negotiating for cargoes from the US, Russia, and West Africa are immediate steps being taken to mitigate supply risks.

Further bolstering the nation's resilience, India's Strategic Petroleum Reserves can cover approximately 9.5 days of net oil imports. Coupled with domestic crude stocks and storage facilities held by state-run oil companies, which can accommodate an additional 64.5 days of total net imports, the current national storage capacity stands at a considerable 74 days of total net imports.

Read More: LPG Supply Problems Force Restaurants to Cut Menus in India

ECONOMIC WINDS

The shifting crude landscape is not without its costs. Refiners are anticipating higher expenses, particularly concerning freight charges for securing these alternative supplies. This upward pressure on costs could translate into broader economic fallout, a factor that India is now reportedly weighing. The jump in crude prices directly affects the cost of fuel, a critical input for many sectors of the Indian economy.

Frequently Asked Questions

Q: Why is India looking for oil from the US and Russia now?
India is seeking oil from the US, Russia, and West Africa because tensions in the Middle East have caused crude oil prices to go up to over $92 a barrel. This is affecting about half of India's oil imports that used to go through the Strait of Hormuz.
Q: How much has the price of oil gone up for India?
The price of crude oil has risen to over $92 a barrel, which is a significant increase from around $70 a barrel before the current Middle East conflict started on February 28.
Q: What is India doing to manage its fuel supply?
Indian refiners are trying to get oil from different countries and are delaying planned maintenance. They are also keeping processing rates normal to build up enough fuel for the country.
Q: How much oil does India usually import?
India needs to import about 88 percent of its crude oil. Many of these imports used to pass through the Strait of Hormuz, which is now a risky route due to the conflict.
Q: Does India have enough oil stored if supply is difficult?
Yes, India has storage for about 9.5 days of net oil imports in its strategic reserves. With additional storage from oil companies, the country has a total capacity for about 74 days of net imports.
Q: Will this situation cost India more money?
Yes, refiners expect to pay more, especially for shipping costs to get oil from new places. Higher oil prices could also lead to higher fuel costs for consumers and businesses in India.