Saudi Arabia, Russia Ensure Oil Supply Stability for India Amid Hormuz Strait Uncertainty

New Delhi – Amid growing tensions in the Strait of Hormuz, Saudi Arabia and Russia have emerged as key players in safeguarding India's energy security, offering continued crude oil supply despite rising geopolitical risks, according to a report released on Monday.

India, which maintains crude reserves sufficient for 90 days, is particularly reliant on the Strait of Hormuz—a critical energy chokepoint—through which over 35% of its crude and 42% of its LNG imports are routed.

However, Saudi Arabia’s ability to reroute exports via the Red Sea through the Petroline-Yanbu corridor offers an important contingency. India currently sources around 18–20% of its crude oil from the Kingdom.

“Although logistical challenges and higher freight costs may persist, Saudi Arabia’s diversified export infrastructure, combined with India’s adaptable sourcing strategy, significantly lowers the risk of a major supply shortfall,” stated the report by Yes Securities.

Concerns have escalated following the Iranian Parliament’s approval to potentially close the Strait in response to recent US military strikes on Iran’s nuclear facilities—sparking fears of disruption in the world’s most crucial oil transport route.

Despite the threat, India is better positioned than in previous years due to a diversified import portfolio. Russia now supplies 2.2 million barrels per day (mb/d)—surpassing the total from all Middle Eastern countries combined. Additional imports from the US, Brazil, West Africa, and Latin America also bypass the Strait entirely.

India currently imports 5.5 mb/d of crude oil, with approximately 2 mb/d transiting the Strait of Hormuz. But since 2022, the country’s sourcing strategy has evolved significantly.

“Russian imports now outpace all Middle Eastern suppliers. Combined with 0.44 mb/d from the US and additional flows from Brazil and Africa through alternative sea routes like the Suez Canal, the Cape of Good Hope, and the Pacific, India is well-equipped to withstand potential disruptions,” the report added.

While the possibility of a full blockade of the Strait remains a concern, analysts consider it highly unlikely. Iran relies on the strait for 96% of its own oil exports, mostly via Kharg Island, and any closure could harm its economy, jeopardize relations with key buyers like China, and provoke a military response.

Experts believe the most plausible scenario would be short-term disruptions lasting 24 to 72 hours. Even so, such events could create market turbulence, reduce tanker availability—already reflected in a decline of empty tankers headed toward the Middle East—and lead to higher shipping premiums and oil prices.

With inputs from IANS