India Diversifies Crude Oil Sourcing to Latin America Amid West Asian Supply Disruptions

India, the world's third-largest oil consumer, is actively widening its crude oil sourcing to Latin America and other regions as disruptions linked to the Iran conflict and the Strait of Hormuz push the country to diversify its supply chain. Ship-tracking data from Kpler indicates that Indian crude imports from Venezuela rose sharply in August, reaching about 444,000 barrels per day (bpd).

This surge positioned Venezuela ahead of Iraq at 118,000 bpd and the United States at 153,000 bpd during the month, making it India's fourth-largest supplier. Venezuela's standing in India's import mix has climbed steadily since shipments resumed in April. Indian refiners have increasingly purchased crude from Venezuela, Brazil, and Africa following West Asian supply bottlenecks, while maintaining a heavy reliance on Russian oil.

Russia remains India's dominant crude supplier. Imports from Russia hovered close to 2 million bpd in August, after reaching approximately 2.6 million bpd in June and July. Russian crude accounted for more than half of India's total crude intake during that period, serving as a key hedge against disruptions in traditional West Asian routes. Overall crude imports have held steady at around 5 million bpd in recent months, allowing refinery operations to remain resilient.

However, importing from alternative regions such as Latin America, West Africa, and the US involves longer voyage times, which can increase freight and insurance costs. Sumit Ritolia, Senior Manager - Modelling at Kpler, noted that while diversification improves supply security, it does not fully insulate the country from geopolitical factors. He explained that higher transport and freight costs can drive up India's overall oil import bill even when sufficient physical crude is secured.

The data shows that West Asian supplies fell to about 30 percent of India's import basket between April and July, down from 43 percent a year earlier. Conversely, Latin American supplies, including Venezuela and Brazil, rose to 12.7 percent over the same timeframe compared to 3.5 percent previously. Gulf producers remain geographically closer, offering lower transportation costs, meaning that replacing West Asian barrels entirely is neither practical nor economical.

Beyond crude oil, India faces distinct vulnerabilities in other hydrocarbons. The country's dependence on West Asia is significantly higher for liquefied petroleum gas (LPG) and liquefied natural gas (LNG), where alternative supplies and logistical flexibility are more constrained. This reality underscores the need for broader energy security measures, including enhanced gas supply networks, storage infrastructure, and strategic inventories.

India's broader energy strategy also includes boosting domestic upstream production, expanding strategic petroleum reserves, and accelerating alternatives such as natural gas, compressed natural gas (CNG), electric vehicles, biofuels, and renewable energy. While domestic production and alternative fuels cannot immediately displace high oil demand driven by rising vehicle ownership, industrial activity, and petrochemical consumption, they form part of a multi-pronged approach to manage import risks.

"Global supply chain disruptions in traditional energy corridors highlight the critical importance of supply chain resilience and diversification for growing economies like India. As businesses and industrial sectors navigate geopolitical uncertainties, energy security requires a balanced approach combining multi-region sourcing, strategic reserves, and gradual adoption of alternative energy solutions. For industrial enterprises, managing logistics costs and maintaining flexible procurement strategies will remain essential as global trade dynamics continue to evolve." — Dr. Shishir Gupta, Founder & CEO, StartupLanes