India is resilient to the Persian Gulf crisis. The government has a secure strategy for oil supplies exceeding 240 million tons per year [REPORT]

The Indian government and operators have handled the oil supply crisis from the Persian Gulf very well. Long-term contracts, supply management, and storage facilities have ensured relatively stable operations for industries using this strategic commodity. Although global exports from the Persian Gulf fell by 30.7% year-on-year, deliveries to Indian refineries from this region only decreased by about 13%. Countries on the Arabian Peninsula continue to dominate India’s seaborne oil supplies. Tankers delivered over 47 million tons of crude oil to India’s offshore terminals.

“Exports from the Persian Gulf fell by 30.7% year-on-year to 299.7 million tons in the January-June 2026 period, accounting for 29.5% of global seaborne crude oil trade,” reports Banchero Costa Research in its latest report. The blockage in the Strait of Hormuz has caused a significant decline in seaborne supplies, compared to the traditional annual norm of around 40%.

According to Kpler analysts, disruptions to Middle Eastern crude oil supplies reached a record high of 12 million barrels per day between March and May 2026. This is due to oil transit through the Strait of Hormuz being limited to only about 2 million barrels per day. Production temporarily returned to tanker deliveries of around 7.5 million barrels per day in early July. Saudi Arabia, Iraq, and other countries began restoring supplies after the signing of the US-Iran agreement in mid-June.

 

Oil Supplies to India by Country. Source: Banchero Costa Research

Russia Rescues India’s Oil Balance

India rescued its oil balance with supplies from Russia. Imports of Russian crude oil to India surged to a record high in June, according to a report from the Center for Research on Energy and Clean Air (CREA). India increased its crude oil purchases by 34% compared to the previous month.

In June, India purchased approximately €4.5 billion worth of Russian crude oil. This represented 83% of Russia’s total fossil fuel imports of €5.5 billion. India became the second-largest buyer of Russian hydrocarbons after China in mid-2019, according to the CREA report.

The sharp increase in Indian purchases comes as India’s total crude oil imports rose by 5.4% month-on-month, and Russian supplies to key refineries saw a significant increase. Deliveries to Reliance Industries’ Jamnagar refinery increased by 150% compared to May, while imports to Indian Oil Corp.’s Paradip refinery increased by 126%, according to the New India Express. According to CREA, BPCL’s Kochi refinery and Nayara Energy’s Vadinar refinery saw increases of 83% and 45%, respectively.

The situation remains volatile, and Kpler analysts estimate the current supply disruptions as follows: “Iraq (2.2 million barrels per day), Saudi Arabia (2.3 million barrels per day), Kuwait (1.4 million barrels per day), Iran (1.3 million barrels per day), Qatar (1 million barrels per day), the Neutral Zone (0.5 million barrels per day), and Bahrain (0.1 million barrels per day).” No supply disruptions were reported in the United Arab Emirates.

Banchero Costa Research reports that globally, “Exports from Russian ports (including crude oil of Kazakh origin) increased by 3.5% year-on-year to 117.1 million tons in the first half of 2026.” Russian oil accounts for 11.5% of global trade. Exports from South America increased by 31.5% year-on-year to 137.6 million tons. Exports from the United States increased by 20.5% year-on-year to 107.3 million tons by June 2026.

India – 240 million tons of oil in 2025

India is a major player in the crude oil market. With a demand of approximately 240 million tons of oil per year, India is the world’s fourth-largest importer of seaborne crude oil. Demand for this strategic commodity continues to be driven by the EU, China, and ASEAN. India’s share in global crude oil trade from January to June 2026 was 11.7%.

Seaborne imports to India increased by 2.4% year-on-year to 228.1 million tons in 2023, by 2.5% year-on-year in 2024 to 233.4 million tons, and then by 2.5% year-on-year in 2025 to 239.4 million tons. During the January-June 2026 period, crude oil imports to India decreased slightly by 0.3% year-on-year, from 119.7 million tons in the first half of 2025 to 119.4 million tons.

Oil exporters to India in 2025. Source: S&P Global

To ensure the security of its oil supply, India is also considering storing crude oil reserves in foreign storage facilities. During Prime Minister Modi’s recent visit to the United Arab Emirates, the country’s state-owned oil and gas company announced plans to increase the amount of crude oil stored in India to 30 million barrels, reports Irina Slav for Oilprice.com.

It is assumed that ADNOC (Abu Dhabi National Oil Company) could increase the amount of Indian crude oil stored in the UAE, specifically in tanks at the Port of Fujairah, located on the edge of the Strait of Hormuz. Fujairah Port was attacked, and tank fires led to a halt in loading at fuel terminals.

Abu Dhabi National Oil Company (ADNOC) will also support the development of a storage system in India. The company has signed strategic agreements with Indian partners to expand its crude oil storage capacity in India to 30 million barrels. Plans include existing facilities in Mangalore and new locations in Vishakhapatnam and Chandikol. These investments will be supported by storage facilities in Fujairah and broader cooperation in the storage and distribution of liquefied natural gas (LNG) and liquefied petroleum gas (LPG).

China and the EU dominate

“In terms of demand (measured by the number of deliveries to unloading ports), the largest importer of crude oil by sea in the first half of 2026 was China’s maritime terminals, which accounted for 20.5% of global seaborne crude oil trade,” reports Banchero Costa Research. China’s imports decreased significantly in the first half of this year, by 14.2% year-on-year, to 209.5 million tons. In the first half of 2025, imports exceeded 244 million tons.

Seaborne imports from European Union countries increased by 1.7% year-on-year to 227.6 million tons. EU countries generated significant demand and accounted for 22.3% of global seaborne crude oil trade. Poland imported 18.8 million tons of crude oil and fuels via the Northern Port during the first six months of this year. This was almost as much (98%) as during the same period last year.

Crude oil tankers delivered 18.5% less crude oil to South Korea year-on-year, and 56.7 million tons of crude oil were pumped from fuel terminals to refineries. Japan’s imports decreased by 22.5% year-on-year to 44.1 million tons in the January-June 2026 period. US imports increased by 8.9% year-on-year to 62.8 million tons in the January-June 2026 period.

Jamnagar Port – over 30 million tons of crude oil in the first half of this year.

About 48% of the crude oil pumped from tankers to refineries in India in the January-June 2026 period was transported by VLCCs. Approximately 30% was transported by Suezmax tankers, and approximately 22% by Aframax tankers.

The largest crude oil unloading ports in India during the January-June 2026 period were: Jamnagar (31.6 million tons of crude oil received), Vadinar (25.3 million tons), Paradip (16.4 million tons), Mundra (10.9 million tons), Mumbai (9.1 million tons), Kochi (7.7 million tons), Visakhapatnam (6.2 million tons), New Mangalore (5.9 million tons), and Chennai (4.7 million tons).

The oil market continues to be significantly impacted by political turmoil in the Arabian Peninsula, the Black Sea, and the Levant. Russia, which maintains its share of crude oil sales, and Norway, which benefits from high crude oil prices, benefit.

Tankers from Russian ports deliver both Russian and non-Russian crude (Kazakh crude). Exports increased by a mere 4.1 million tons in 2021, reached a record 82 million tons in 2024, and then declined to 79.5 million tons in 2025, according to analyst Banchero Costa Research.

In the first half of 2026, Russian oil exports increased slightly by 1.8% year-on-year to 41.7 million tons. This year, Russian ports remain the second-largest loading point for seaborne crude oil to India. At Indian refineries, 35% of the crude processed came from Russia. Russian crude oil still lags behind supplies from the Persian Gulf, whose drilling accounts for 39.5% of India’s imports. India imports only 8.3% from West African terminals, and 3.6% from the US.

Oil Suppliers to India in 2026 Source: The Indian Express, Graphic: Abhishek Mitra

Avoiding the Strait of Hormuz

Supplies from the Persian Gulf to India fell by 13.3% year-on-year in the January-June 2026 period to 47.2 million tons. However, due to supply constraints through the Strait of Hormuz, supplies from individual countries in the region also varied. Saudi Arabia remained India’s largest supplier from the Arabian Peninsula. In the first half of the year, tankers from its fuel terminals delivered 15.1 million tons, or 12.6% of India’s total imports.

Supplies from the United Arab Emirates increased by 37.9% year-on-year to 13.4 million tons. Iraq followed, becoming India’s second-largest supplier in the Persian Gulf. Shipments to Oman rose sharply to 4.1 million tons, from just 0.7 million tons a year earlier.

In turn, Iraqi volumes fell 59.3% year-on-year to 9.8 million tons, while Kuwait saw a 32.6% decline to 2.4 million tons, with smaller contributions from Qatar (1.9 million tons) and Iran (0.6 million tons). Shipments from West Africa to India increased 31.5% year-on-year between January and June 2026 to 9.9 million tons. Imports from the US fell 35.2% year-on-year between January and June 2026 to 4.3 million tons.

Kpler’s Victoria Grabenwöger reports that after another period of tensions and disruptions in crude oil transport, seaborne shipments have increased again and now exceed 8.8 million barrels per day. “We expect these to continue to expand, potentially reaching 10.5 million barrels per day in August and 11 million barrels per day in September.”

India Makes Money on Oil

In India, companies are also making money by capitalizing on the cyclical surge in oil and refined product prices. Oil and Natural Gas Corp.’s (ONGC.NS) first-quarter profit exceeded estimates as higher crude oil and natural gas prices and a weaker rupee offset lower production, reports Rakesh Sharma of Energy Connects, citing Bloomberg.

The company’s net income more than doubled in the quarter ended in June, reaching 170.34 billion rupees ($1.8 billion), according to stock exchange filings. Sales revenue increased 45% year-on-year, to 464.60 billion rupees.

ONGC stock from August 2025 to August 2026. Source: Yahoo Finance

The state-owned oil and gas producer’s earnings reflect the overall market situation. Higher earnings are essential for ONGC as the company must increase its spending on exploration for new fields. ONGC plans to create strategic domestic crude oil reserves totaling 1.75 million tons, or 12.8 million barrels. The company will also seek government approval for commercial use of these reserves, Reuters reported in August.

India currently has domestic crude oil reserves of 5.33 million tons, equivalent to approximately 39 million barrels. The reserves are located in three locations in the southern part of the country. The reserves are managed by the state-owned company Indian Strategic Petroleum Reserves Ltd. The maximum reserve capacity can only cover eight days of domestic oil demand, Bloomberg reports.

They extract, store, and trade

ONGC therefore plays a key role in the Indian government’s policy to increase the resilience of the energy system and chemical industry to global turbulence. This is particularly aimed at reducing India’s growing dependence on imports, which meet nearly 90% of domestic oil demand.

ONGC accounts for two-thirds of India’s crude oil supply and more than half of its gas production. ONGC’s oil and gas production fell 3.4% year-on-year, to 9.4 million tons of oil and gas equivalent, according to Bloomberg.

To protect itself from fluctuations in external supplies, ONGC will invest more than 400 billion rupees ($4.2 billion) in projects across its Western Offshore assets, the company announced in a statement. The company has also hired BP Plc as a technical services partner to increase production from these fields.

“We expect the benefits of these investments to gradually materialize from the 2027-28 fiscal year, leading to increased production, improved recovery, and sustained value creation in the coming years,” Oil and Natural Gas Corp. management said.

Data released in August of this year showed that the company’s earnings per barrel of crude oil sold in the April-June period were 50.4% higher than a year earlier. Earnings from gas produced from old fields increased by 5.4%, but from new deepwater fields were 61.5% higher compared to the previous year.

Russia: A Strategic Supplier

India will continue to import Russian crude oil, regardless of its status as exempt from US sanctions, said Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, in May. She emphasized that “the country’s energy security and economic interests remain a top priority in the face of rising global fuel prices and tensions in West Asia.”

The comments came after the Trump administration allowed a key sanctions waiver related to Russian maritime oil exports to expire at the beginning of the blockade of the Strait of Hormuz.

During a press briefing, Sujata Sharma, Secretary of the Ministry of Petroleum and Natural Gas, said that India’s approach to oil imports remains “consistent” despite changing geopolitical conditions, reports the New Indian Express.

India needs to ensure stable and increased oil supplies as India’s consumption of refined petroleum products is projected to reach a new record in the 2026-27 financial year, according to the latest estimates from the Petroleum Planning & Analysis Cell (PPAC), reports Sukalp Sharma of The Indian Express. Demand for crude oil is driven by rising demand for gasoline, diesel, LPG, jet turbine fuel, and kerosene.

The ministry’s forecasts predict that total petroleum product consumption will increase by about 2.8% in fiscal year 2026 to approximately 250.8 million tons, surpassing the record 244 million tons in that year. Sharma explains the higher demand in 2027 by citing the following: “Rising fuel consumption reflects continued growth in the transportation, industrial, and aviation sectors, while India’s growing middle class and growing vehicle population continue to drive energy consumption.”

The Indian government recognizes that low domestic oil production makes the country dependent on imports of crude oil and other energy resources. The government has clearly defined an energy security strategy. India’s purchasing decisions are based on affordability, availability, and national interest.