Official Indian refiners have secured their crude oil needs for the next two months, reducing their urgent need to resume purchasing from Middle Eastern suppliers, despite the return of commercial shipping through the Strait of Hormuz after reaching a temporary peace agreement between the United States and Iran.
According to informed sources, a number of oil suppliers in the region, led by the UAE company ADNOC, requested Indian refineries to begin receiving the quantities agreed upon within long-term supply contracts. However, these refineries have not yet shown a clear commitment to resume withdrawal from these supplies.
This comes at a time when the global oil market continues to monitor navigation traffic developments in the Strait of Hormuz, which witnessed an almost complete cessation of energy shipments during the period of tensions as a result of restrictions imposed by Tehran and Washington. As conditions improved, ship traffic gradually began to return to the vital waterway.
Kpler data showed that India’s imports of Middle Eastern oil declined during the second quarter to their lowest levels since at least 2013, after government refineries increased their spot purchases from alternative sources, most notably Russia and some South American countries, to compensate for the shortage of supplies coming from the Arabian Gulf.
The sources also indicated that the Indian government has not yet decided on the timing of resuming oil loading operations from the region’s ports, in light of continuing concerns related to navigation security.
Indian refineries also face the challenge of rising maritime shipping costs, with increasing global demand for tankers amid doubts about the sustainability of the ceasefire agreement. This gives the added advantage of Russian oil being delivered directly to buyers, making it a more economically attractive option.
Despite the expiration of US exemptions for Russian oil, sources expect Indian refineries to continue purchasing Russian crude after their success in finding alternative mechanisms to deal with the imposed restrictions. Russian oil is still being offered at discounts ranging between one dollar and two dollars per barrel compared to dated Brent crude, with the possibility of these discounts increasing in light of the abundance of supply.
In a related context, the Indian Oil Company recently launched tenders to charter a number of tankers, including a giant gas tanker, a Suezmax tanker, and a very giant crude oil tanker, to transport oil and liquefied petroleum gas from ports located behind the Strait of Hormuz.
The sources confirmed that this step comes within the framework of testing the availability of ships in the market, and should not be considered a direct indication of the imminent resumption of oil imports from the Middle East. On the other hand, ADNOC refrained from commenting, while the Indian Ministries of Oil and Shipping or the Indian Oil Company did not issue any immediate response to media requests for comment.
