Russia Ready To Boost Oil Supplies To India, China As Iran Crisis Drags

As a widening conflict has put the spotlight on crude oil and liquefied natural gas cargoes stuck behind the Strait of Hormuz, Deputy Prime Minister Novak on Wednesday said that Russia is prepared to increase the supply of oil to India and China. This could offer a potential buffer amid the rising tensions in the Strait of Hormuz.

"Our oil is in demand. If they buy, we will sell," he told journalists as per a report by Interfax news agency.

This comes merely a month after India decided to stop buying Russian Crude as part of the India-US trade deal. Sources told NDTV Profit on Tuesday that India has activated an 'emergency' crude supply strategy amid the rising tension in the Middle East involving Iran, Israel and the US, 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.

Interestingly, Russia had retained its position as India's largest crude supplier in February. Data from Kpler showed that in the last month Russian imports stood at over 1 mbd, slightly lower than 1.1 mbd in January. On the other hand, the imports from Saudi Arabia rose in volumes by nearly 30% month-on-month to over 1 mbd.

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