India Pivots to Non-Strait Oil Sources Amid Escalating Iran-Israel Conflict

Refineries have postponed planned maintenance shutdowns and are maintaining normal processing rates to create buffers that can meet the country’s near-term needs, senior government sources said. Sensing that there is some disruption in crude oil supply due to the partial halt of tanker movements in the strategic waterway Strait of Hormuz, the government also said that it will depend on non-strait sources to meet oil demand.

Sources said, “Sources outside the Bosphorus are fully operational and we are increasingly supplying materials from non-conflict regions. These supply sources accounted for more than 60 percent of supplies in 2025, and after the Middle East conflict, this rate increased to 70 percent.”

India imports about 88 percent of its crude oil, and in February roughly half of that supply passes through the Strait of Hormuz, the narrow sea route between Iran and Oman that serves as a key energy transit route for global markets. However, the recent US and Israeli military strikes against Iran, followed by Tehran’s retaliation, have sharply increased tensions in the region and, in one way or another, damaged oil supplies.

“Indian refineries are drawing crude oil from West Africa, Latin America, the US and other reliable sources to meet the country’s demand. Even the US treasury department has opened another path by allowing a 30-day exemption for the sale and delivery of sanctioned Russian oil to India, which is already loaded on ships,” the source said.

The waiver allows the sale, delivery or unloading of Russian crude oil and oil products loaded onto ships on or before March 5, including ships subject to certain sanctions. The exemption will be valid until April 5 and will allow cargo currently in transit to be completed without violating sanctions restrictions.

There were 120 million barrels of Russian crude oil in the water. Of this, 15 million barrels of Russian crude oil are in tankers close to India – in the Arabian Sea and the Bay of Bengal – while another 7 million barrels of Russian crude are sitting idle near Singapore.

However, industry insiders said Indian refiners have started buying Russian oil. “Reliance Industries, Hindustan Petroleum Corporation Ltd and HPCL-Mittal Energy Ltd, which had halted purchases of Russian crude oil following US sanctions on Moscow’s leading producers Rosneft and Lukoil last year, have returned to the market to secure Russian cargoes,” they said.

The oil ministry official also said India never stopped buying Russian oil; It imported approximately 1.04 million barrels of Russian crude oil per day in February, down from the 1.6-1.8 million barrels per day seen in 2023-2025. “We are in a very comfortable position in terms of raw and finished products.” he said, adding that the combined inventory could meet the country’s demand for 50 days.

According to oil ministry data, India’s strategic oil reserves are capable of meeting approximately 9.5 days of net oil imports. “In addition, state-run oil companies have storage of crude and petroleum products equivalent to 64.5 days of net imports, which brings the country’s total storage capacity to approximately 74 days of net imports,” the ministry said.

However, the analyst said higher prices will increase India’s import bill and sourcing from non-Middle Eastern suppliers means longer transportation and higher freight. Additionally, insurance premiums have increased. “Every $10 increase in crude prices could add 20-25 basis points to the consumer price index if passed on to consumers, or widen the fiscal deficit if taxes were cut to neutralize the impact,” they said.