India Turns to Russian Crude as Hormuz Crisis Rewrites Energy Maps

The disruption in the Gulf forced New Delhi to aggressively diversify away from traditional Middle Eastern suppliers. Iraq and Kuwait saw their market presence vanish for months, while Saudi Arabia’s exports to India plummeted from 1 million barrels per day in February to just 330,000 in June. Indian Oil Corporation and Reliance Industries led the shift, with Nayara Energy—partially owned by Rosneft—relying exclusively on Russian barrels to maintain its output. This reliance was bolstered by an unexpected surplus of Russian crude, as Ukrainian strikes on domestic refineries and slowing Chinese demand freed up significant export volumes.

As traffic through the Strait of Hormuz slowly recovers following a mid-June ceasefire, Middle Eastern producers are initiating a fire sale to reclaim their market share. Iraq is reportedly offering stranded cargoes at discounts of up to $20 per barrel, and other Gulf exporters are experimenting with ship-to-ship transfers near Fujairah to mitigate buyer risk. These aggressive pricing strategies are forcing a correction in the market; Russian crude, which previously commanded premiums, is now trading at discounts of $4–6 per barrel to remain competitive.

Despite the return of cheaper Gulf oil, India is unlikely to dismantle its Russian supply lines. The Hormuz crisis laid bare the fragility of the nation's strategic petroleum reserves, which provide only a fraction of the 90-day coverage recommended by the IEA. For New Delhi, Russian oil has evolved into a permanent insurance policy. While the volume of Russian imports may fluctuate as global supply chains normalize, the strategic imperative to avoid another supply shock ensures that Moscow will remain a primary supplier for the foreseeable future.