Red Sea crisis: India turns to West Asia to replace crude supply from the US
- India’s crude oil imports from Iraq reached a 21-month peak in January, 2024.
- It is driven by disruptions in US oil supply due to escalating freight rates amidst the Red Sea crisis.
Shift in Import Patterns
- Indian refiners, unable to secure US crude, turned to West Asia for oil supply.
- US crude, a significant supplier, was absent in January, 2024contrary to the average daily imports of 205,000 barrels in 2023.
Impact of Red Sea Crisis
- Disrupted freight routes prompted Indian refiners to seek closer alternatives in West Asia.
- Unlike US routes, West Asian oil cargoes bypassed the Red Sea, mitigating risks.
Increase in Imports
- India's crude imports from Iraq surged by a fourth to 1.19 million barrels per day in January, 2024 the highest since April 2022.
- UAE and Saudi Arabia also experienced spikes in oil exports to India.
Security Concerns
- Attacks on vessels in the Red Sea by Yemen’s Houthi rebels heightened security risks.
- Major shipping lines opted for longer, safer routes, impacting global trade and energy supplies.
Stability of Russian Supplies
- Russian oil shipments remained stable, unaffected by Red Sea tensions.
- Urals crude, a staple in Indian imports, maintained consistent supply levels.
- Payment issues affected Sokol (Russian Oil Firms) crude deliveries, leading to increased reliance on Iraq and UAE oil.
Shift in Supplier Dynamics
- Russia emerged as India's primary oil supplier following discounts offered post-Ukraine invasion.
- Traditional suppliers like Iraq and Saudi Arabia faced displacement in India's import hierarchy.
Prelims Takeaway
- Oil supplying Countries bordering Red Sea
- Crude Oil Imports to India Country Wise