Ship-to-ship transfers boost India’s West Asian oil imports, Russian flows see supply pressure

India's oil imports from West Asia experienced a significant increase in September, thanks to ship-to-ship (STS) cargo transfers that helped Gulf suppliers bypass the dangerous Strait of Hormuz. However, imports from Russia's largest supplier, Russia, fell for the second consecutive month due to increased competition from Chinese refiners and limited Russian crude availability, according to tanker data.

Amid the ongoing conflict, the improved availability of West Asian oil is a relief for India, which is under pressure from the US to diversify its oil sources. The recently passed US Sanction Law on Russia and Iran has added uncertainty to Russian oil imports, with the US President having the authority to impose tariffs as high as 100% on India, the top buyer of Russian oil.

Indian refiners are advised to progressively reduce their reliance on Russian crude and diversify their oil import sources further. Russian oil imports declined by nearly 9% in September to 1.9 million barrels per day (bpd) from 2.1 million bpd in August, the lowest level in five months. In contrast, imports from Iraq rose by 238.2%, Saudi Arabia by 56.2%, and Kuwait by 104.4% in September.

Among West Asian suppliers, only the UAE saw a decrease in volumes. The improved availability of Middle Eastern barrels could encourage Indian refiners to rely more on them, especially given the geopolitical uncertainty surrounding the Graham Act.