India taps alternative crude supplies as conflict in West Asia drags on, Pg10

Key Highlights:

• Indian refiners are seeking additional crude oil from the U.S., Russia, and West Africa due to ongoing West Asia conflict.
• In February, about half of India's crude oil imports passed through the Strait of Hormuz.
• Non-strait sources accounted for 70% of India's oil supplies in 2025 after the Middle East conflict.
• The U.S. Treasury Department issued a 30-day waiver for sanctioned Russian oil sales to India until April 5.
• India imported 1.04 million bpd of Russian crude in February.
• International crude oil prices have increased to over ₹92 per barrel from around ₹70.

Detailed Insights:

• The conflict in West Asia has led to a near halt in tanker movements through the Strait of Hormuz, a critical energy transit route.
• Indian refineries have deferred maintenance shutdowns and are maintaining normal processing rates to create buffers.
• The U.S. waiver allows the sale and delivery of Russian crude oil loaded onto vessels before March 5, providing India with another supply avenue.
• Approximately 15 million barrels of Russian crude are near India in the Arabian Sea and Bay of Bengal, with another 7 million barrels near Singapore.
• Reliance Industries, Hindustan Petroleum Corporation Ltd., and HPCL-Mittal Energy Ltd. have resumed purchasing Russian oil.
• Increased crude prices, freight, insurance premiums, and longer shipping routes may worsen the overall cost structure for India.
• A ₹10 increase in crude prices could add 20-25 basis points to the consumer price index or widen the fiscal deficit.

Key Concepts Involved:

• Strait of Hormuz: A narrow sea lane between Iran and Oman, serving as a key energy transit route for global markets.
• Fiscal Deficit: The difference between the government's total revenue and its total expenditure.
• Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services.