India Expands Crude Oil Sources Amid Ongoing Middle East Tensions

Indian refiners are actively seeking additional crude oil supplies from the United States, Russia, and West Africa as the conflict in the Middle East continues to escalate. This strategy aims to ensure that the country maintains adequate oil supplies amidst growing geopolitical tensions, according to industry officials and analysts.

Approximately 88 percent of India’s crude oil is imported, with about half of those supplies, as reported in February, passing through the Strait of Hormuz. This strategic waterway, located between Iran and Oman, is crucial for global energy transit. Recent military actions by the United States and Israel against Iran, coupled with Tehran’s retaliatory strikes on US bases, have led to significant disruptions in tanker traffic through this narrow passage.

In response, Indian refineries have postponed planned maintenance shutdowns and are operating at normal processing rates to build up inventory levels. “Non-strait sources are fully operational, and we are sourcing more supplies from non-conflict zones,” a senior official from the Oil Ministry remarked. He noted that non-Strait sources accounted for 60 percent of crude supplies in 2025, which increased to 70 percent following the escalation in the Middle East.

The ongoing crisis has prompted Indian refiners to turn to crude from West Africa, Latin America, and the United States. A recent 30-day waiver issued by the US Treasury Department permits the sale and delivery of sanctioned Russian oil that was loaded onto vessels before March 5, 2025. This exemption will remain valid until April 5, 2025, allowing cargoes in transit to be completed without violating sanctions.

Currently, there are about 120 million barrels of Russian crude on the water, with approximately 15 million barrels positioned near India in the Arabian Sea and Bay of Bengal. Industry sources indicate that Indian refiners, including Reliance Industries and Hindustan Petroleum Corporation Ltd, have resumed purchasing Russian oil after initially halting imports due to sanctions against major Russian producers like Rosneft and Lukoil.

Despite these sanctions, India has continued to import Russian crude, averaging 1.04 million barrels per day in February 2025. The Oil Ministry emphasized that India is in a “very comfortable position” regarding its crude and finished product supplies. Currently, the country has about 144 million barrels of crude in onshore storage, sufficient to cover approximately 30 days of imports at 2025 levels.

India’s Strategic Petroleum Reserves can cover around 9.5 days of net oil imports. Additionally, state-run oil companies have storage capacity for crude and petroleum products equivalent to 64.5 days of net imports, bringing the total storage capacity to around 74 days.

While India seems capable of securing adequate crude supplies, analysts warn of potential economic challenges stemming from rising oil prices. The cost of international crude oil has surged to over USD 92 per barrel from approximately USD 70 following military actions on February 28, 2025. Furthermore, liquefied natural gas (LNG) prices have seen a dramatic increase, exceeding USD 24-25 per million British thermal units.

These rising costs are expected to escalate India’s import bill, contributing to a widening current account deficit and exerting pressure on the Indian rupee. Analysts suggest that every USD 10 increase in crude prices could raise the consumer price index by 20-25 basis points if passed on to consumers. The immediate effects of these changes will likely include a higher import bill and increased financial strain.

India, the world’s third-largest crude oil importer, relies heavily on Middle Eastern supplies for nearly half of its crude imports. The disruption in tanker traffic through the Strait of Hormuz has placed significant pressure on India’s energy supplies. In February 2026, India received 2.8 million bpd of crude, which accounted for 53 percent of total imports, primarily from Iraq, Saudi Arabia, the UAE, Kuwait, and Qatar.

As the situation unfolds, India’s refineries will continue to adapt to the changing landscape of crude oil sourcing, balancing the necessity for supply with the challenges posed by shifting geopolitical dynamics and economic pressures.