The US-Iran war, now in its seventh month, has caused major disruptions for countries that rely heavily on crude oil imports from the . India has been forced to diversify its sources as disruptions to global oil flows threaten .
While Indian refiners have turned to new suppliers to keep crude supplies flowing, the shift has done little to reduce the country’s dependence on a handful of major exporters, with Russia continuing to lead the pack.
India adds new suppliers
Citing data from analytics firm Kpler, The Economic Times on Tuesday reported that nine of India’s 10 new suppliers together account for roughly 1.4 per cent of crude imports in the six months of the between March and August. The only exception was Venezuela, which accounted for roughly five per cent of crude imports.
Despite diversifying its sources and the addition of new suppliers, New Delhi sourced most of its crude oil from a small group, with the top five nations accounting for 76 per cent, compared to 79 per cent in the preceding six months.
India’s HHI jumps 56% despite new suppliers
In the March-August period, the Herfindahl-Hirschman Index (HHI), which measures the concentration of India’s suppliers, jumped 56 per cent to 2,513 from 1,606 in the preceding six-month period, despite the increasing number of suppliers. Meanwhile, India’s crude imports declined 5 per cent to 4.77 million barrels per day.
An HHI of more than 2,500 implies a higher concentration of suppliers, whereas an HHI of less than 1,500 represents low concentration. According to the report, the increase has been primarily driven by Russia, whose share of India’s crude imports jumped to 47 per cent during March-August, up from 29 per cent in the preceding six months.
India changes composition of its top suppliers
Following the disruptions that the war has caused, New Delhi has reworked the composition of its top five suppliers, with Brazil and Venezuela replacing the US and Nigeria, while Russia, Saudi Arabia, and the United Arab Emirates (UAE) continued to be the leading suppliers.
In the last six months, New Delhi sourced from 31 countries to meet its demand, up from 24 countries in the preceding six months. During the period, 10 new countries entered India’s supply mix, whereas three nations that previously supplied crude were no longer among its sources.
Apart from Venezuela, India’s new suppliers have remained marginal, with countries like , Ecuador, the Bahamas, Algeria, the Netherlands, Canada and others mostly supplying crude in only one of the six months.
India turns to Venezuela amid disruptions
Last month, news agency PTI reported that New Delhi turned to Caracas to widen its crude oil sourcing as the US-Iran war and the Strait of Hormuz disruptions pushed the world’s third-largest oil consumer to diversify supplies. In August, Venezuela’s crude imports saw a sharp increase, making the South American producer India’s fourth-largest supplier.
Saudi Arabia’s crude supplies fell around 300,000 barrels per day (bpd), with the shortfall partly balanced by the resumption of Venezuelan shipments at 233,000 bpd and a 50,000 bpd rise in imports from Angola. US supplies also dropped by roughly 200,000 bpd, while increased shipments from Oman and Brazil helped make up some of the gap.
Among India’s major suppliers, Iraq witnessed the steepest decline, with its share falling to around two per cent from 18 per cent. Baghdad’s 820,000 bpd drop in imports was largely offset by a 770,000 bpd rise in Moscow supplies, which reached 2.25 million bpd.
Russia vows to meet India’s crude demand
Moscow, which continues to be New Delhi’s top supplier, on Monday said that it stands ready to supply India with “as much oil as it needs.” The remarks were made by Russian Ambassador to Delhi, Denis Alipov, who said, “We would be ready to supply as much oil as needs. Unfortunately, those who impose sanctions and tariffs have taken the path of pressure tactics instead of honest cooperation, which prevents those countries from offering a better deal to India in oil than us,” ANI reported.