Merely a month after vowing to stop buying Russian Crude as part of the India-United States trade deal, sources have told NDTV Profit that India could consider purchasing more oil from the Vladimir Putin-led nation as part of a broader emergency plan to tackle the ongoing volatility in global oil markets, triggered by escalating tensions in the Middle East.
Indeed, India has activated an 'emergency' crude supply strategy amid the rising tension in the Middle East involving Iran, Israel and the United States, which has led to the closure of the Hormuz Strait, with Iran threatening to set any passing foreign ships 'ablaze'.
As part of these emergency measures, India is expected to put curbs on petrol and diesel exports, and there could be higher LPG rationing. Moreover, alternative shipping routes are under active consideration.
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More importantly, the government is also considering stepping up purchases of Russian crude in order to secure energy supplies for the future, as a potential safeguard against the Middle East conflict, which has escalated following the demise of Iran's Supreme Leader Ayatollah Ali Khamenei.
In order to fast-track these measures, the Indian government and the oil marketing companies are in active discussions, holding multiple meetings and reviewing the evolving situation in the Middle East.
Oil marketing companies and the government are assessing supply-demand dynamics and contingency options, such as buying more Russian crude.
It must be noted that about 2.5 million to 2.7 million barrels a day of India-bound oil passes through the Strait of Hormuz every day, according to data from Kpler. India is the world's third-largest oil importer.
Bloomberg had earlier reported that India's current commercial and strategic crude reserves could be sufficient to cover only two weeks of consumption. Finding an alternative, therefore, becomes the need of the hour, especially if the Middle East tensions continue to escalate.
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