India has imported higher volumes of crude oil from the Persian Gulf than from Russia so far in November, for the first time since the Iran war broke out and disrupted the normal supply chain through the Strait of Hormuz. India is estimated to have imported about 2.1 million barrels per day of crude from the Persian Gulf this month, compared with 1.8 million barrels per day from Russia, Bloomberg reported on Thursday, citing data from Kpler.
The recovery is partial, not complete. Before the war, India’s crude imports via Hormuz averaged about 2.8 million barrels a day. In the early months of the nine month war, Gulf flows to India crumbled to as low as 247,000 barrels a day in April, when the strait was closed to almost all traffic. Getting back to 2.1 million has depended on ship to ship transfers that have moved closer to India’s coastlines amid congestion in the Gulf of Oman and fears of attacks on tankers near the strait, with the Gulf of Kutch emerging as a transfer point facing the Arabian Sea.
Price did as much of the work as logistics. At the end of October, Bharat Petroleum, one of India’s biggest state owned refiners, said it would reduce purchases of Russian crude in November because high freight costs and premiums on Russian barrels had undermined their attractiveness against Middle Eastern offers, whose prices are falling. The shorter Gulf voyage compounds the advantage now that cargoes can move again.
Russian supply is also shrinking at the source. Bloomberg tanker data show Russia’s overseas shipments slipped by 40,000 barrels a day to 3.63 million barrels a day in the four weeks through November 8, under continued Ukrainian attacks on Russian energy infrastructure.
The read across is twofold. For Gulf producers, India is again a growth outlet at the moment OPEC output is recovering toward pre war levels. For the market’s risk map, India’s renewed dependence on Hormuz transits rebuilds exactly the exposure that April’s 247,000 barrel a day trough exposed, and it is being rebuilt while attacks on shipping near the strait are still being reported this week.