Mumbai, 21 June (HS): India's crude oil imports reached a

new high in June, with Russia emerging as the leading supplier, closely

followed by the UAE, which imported near-record amounts. This change is a

deliberate diversification strategy, encouraged by enticing discounts and

concerns over the Strait of Hormuz. Venezuela is taking on a critical role,

while the reopening of the Strait implies a gradual return to normalized

supplies, beginning with LPG's expected comeback. According to data from

maritime intelligence firm Kpler and industry analysts, India's crude oil

imports from Russia increased sharply in June, while purchases from the UAE

remained near record highs, as refiners moved to secure supplies amid lingering

uncertainty about shipments through the Strait of Hormuz.

Kpler data indicated that between June 1 and June 19, India

purchased an average of 2.66 million barrels per day (bpd) of crude oil from

Russia, up from 1.91 million bpd in May. The rise bolstered Russia's status as

India's major oil supplier. Imports from the UAE totaled 636,000 bpd for the

same time, just slightly below than the record 644,000 bpd imported in May.

Venezuela became India's fourth-largest oil supplier, with exports of 209,000

bpd, after Saudi Arabia, which delivered 384,000 bpd. In contrast, imports from

the United States fell drastically to 91,000 bpd in June, from 252,000 bpd in

May. The recent import patterns indicate Indian refiners' efforts to diversify

their sourcing and preserve supply security during a moment of turmoil in

global energy markets.

Russian oil has continued to draw customers due to low

prices, while increased supplies from the UAE have helped mitigate worries

about cargoes passing through the Strait of Hormuz.

The interruption at the Strait of Hormuz has changed India's

energy sourcing: India, the world's third-largest energy importer, relies largely

on the Gulf area for crude oil, liquefied natural gas (LNG), and liquefied

petroleum gas. Following military action involving the US and Israel, Iran

closed the Strait of Hormuz, disrupting energy shipments. The canal is one of

the world's most important energy chokepoints, transporting around one-fifth of

global oil consumption and acting as the primary export route for major Gulf

producers such as Saudi Arabia, Iraq, Kuwait, the UAE, and Qatar.

Shipping activity in the strait began to return late last

week after the United States and Iran agreed to a truce. However, questions

about the arrangement's long-term viability remained as Iranian authorities

accused Israel of breaking the truce.

According to Sumit Ritolia, Senior Manager - Modelling at Kpler, the reopening

of the Strait of Hormuz is predicted to have diverse effects on energy

commodities, with LPG benefiting initially. The reopening of the Strait of

Hormuz (SoH) would be a big milestone for global energy markets, but the impact

on India is likely to vary widely across commodities, he added. While India is

one of the top importers of Middle Eastern hydrocarbons (crude, LPG, and LNG),

crude and LNG imports have remained reasonably stable during the interruption,

unlike LPG, which has been the most badly affected.

According to Ritolia, LPG supplies were hurt the most during

the disruption, but crude oil and LNG imports fared better since customers were

able to find alternate sources and shipping routes. He expects recovery to be

phased. Under our basic assumption of gradual reopening beginning in early

July, the initial focus will be on clearing blocked cargoes and restoring

shipping flows before Gulf exporters can significantly expand exports, he

added. According to Ritolia, LPG shipments are expected to normalize first,

followed by LNG and crude oil imports.

Russia is key to India's crude strategy: the country imports

over 88% of its crude oil requirements, almost half of its natural gas demand,

and roughly 65% of its LPG use.

Recent hints of healing have surfaced. Following the US-Iran

ceasefire deal, three Indian-flagged oil tankers carrying more than 860,000

tonnes of crude oil, as well as an Indian LNG carrier, began transit through

the key waterway. Despite the gradual reopening, Ritolia expects Russian crude

to remain a major component of India's import basket. He predicted that Russian

shipments in June will reach 2.35 million bpd, perhaps establishing a new

record, thanks to attractive discounts and steady demand from Indian refiners. He

believes that Russian supplies will continue to play an important role even if

shipping circumstances in Hormuz fully normalize due to their economic benefits

and supply dependability.

Hindusthan Samachar / Abhishek Awasthi