India's Saudi oil imports hit record high: What's the reason?
What's the story
India's crude oil imports from Saudi Arabia reached a record high of 1.05 million barrels per day (bpd) in February, according to data from analytics firm Kpler. The surge comes as India reduced its purchases from Russia due to sanctions imposed by Washington on Russian oil majors Rosneft and Lukoil. Meanwhile, the ongoing US-Iran conflict raises concerns about potential disruptions in the Strait of Hormuz.
Supply
Russia remains India's largest supplier
Despite the reduction in purchases, Russia continues to be India's largest supplier of crude oil with 1.07 million bpd. However, this is nearly 40% lower than the record high of 1.8 million bpd in November and a 10% decline from the previous month. The data also shows that Saudi Arabia's share in India's imports has increased to 19.6% in February from January's 15%.
Import increase
UAE oil imports surge
India's crude oil imports from the United Arab Emirates (UAE) also saw a major spike, rising 42% to 561,000 bpd in February from January's 395,000 bpd. This is part of a larger trend of Indian refiners shifting their focus toward Gulf-origin crude.
Potential impact
Analysts warn of potential impact on India from US-Iran conflict
Analysts have warned that any disruption in the Strait of Hormuz could affect 50% of India's total oil imports and nearly all its LPG purchases. Kpler estimates that around 2.5-2.7 million bpd of India's crude imports pass through this strategic waterway, mainly from Iraq, Saudi Arabia, UAE, and Kuwait. The strait connects the Persian Gulf with the Gulf of Oman and serves as a key maritime route from the Persian Gulf to open seas.
Strategy
Indian refiners may return to Russian oil
With the possibility of tighter access to West Asian grades amid concerns about the US-Iran conflict, analysts believe that Indian refiners could return to Russian oil. Kpler's tracking shows that Russian cargoes are still available in the Indian Ocean and Arabian Sea region, including floating storage volumes. "Should Middle Eastern inflows tighten, Indian refiners could pivot back toward Russian grades relatively quickly," said Sumit Ritolia from Kpler.