India's West Asian oil imports rebound to pre-war levels in September

India's imports of West Asian crude oil surged in September, returning to pre-war levels, while local refiners scaled back purchases of Russian oil amid stiff competition with China. According to ship tracking data, refiners acquired spot cargoes as West Asian producers and traders increased shipments through the Strait of Hormuz, which eased supply constraints caused by the Iran war.

Initially, the world's third-biggest oil importer had raised its Russian crude imports to compensate for reduced West Asian supplies at the onset of the conflict. However, India's crude imports from West Asia jumped in September to approximately 2.8 million barrels per day (bpd), the highest since February and up from 32 per cent in August. Gulf oil accounted for about 54 per cent of overall imports during the month.

In contrast, Russian oil imports fell by about 14 per cent month-on-month to approximately 1.8 million bpd in September. Russia's share of India's oil purchases declined from 46.6 per cent to 33.5 per cent, the data showed.

An Indian refining source noted that Russian oil purchases by Indian refiners are likely to remain subdued in the coming months because the landed cost of Russian oil is now comparable to that of certain West Asian grades, primarily Iraqi oil. Premiums on Russian oil have narrowed to $1 to $2 per barrel against Brent, down from over $10 in recent months, as West Asian supplies returned to the market.

Refiners are leaning towards maximizing purchases of discounted West Asian crude due to shorter voyage times and because some producers have reduced selling prices to offset rising freight costs. A refining source stated that procurement decisions will be driven entirely by pricing.

India's overall oil imports in September rose 20 per cent month-on-month to around 5.33 million bpd. Despite the drop in volume, Russia remained India's largest oil supplier, followed by the United Arab Emirates and Iraq. Notably, imports of Iraqi oil climbed to about 830,000 bpd in September, a significant increase from 171,000 bpd in August.

"The shift in India's crude oil imports highlights how quickly supply chains adapt to geopolitical changes and pricing shifts. When import premiums narrow and freight dynamics change, refiners naturally optimize their procurement routes to maintain cost efficiencies. For businesses dependent on energy inputs, monitoring these macro-level commodity adjustments is essential for managing operational costs and mitigating supply chain risks in a volatile global market." — Dr. Shishir Gupta, Founder & CEO, StartupLanes