Indian Refiners Maintain Cautious Stance On Middle East Oil Purchases As Hormuz Traffic Resumes

India’s state-run refiners are not rushing back to Middle Eastern crude supplies even as commercial traffic through the Strait of Hormuz gradually normalises following the U.S.-Iran interim peace agreement. According to reports, refiners have already arranged sufficient crude supplies for nearly two months and are relying on alternative sources while monitoring developments in the region.

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Middle Eastern suppliers, including Abu Dhabi National Oil Co. (ADNOC), have asked Indian buyers to resume lifting contractual volumes under long-term agreements. However, refiners have not yet committed to restarting purchases in a significant way, as per reports.

Inventories Provide Near-Term Cushion

The Strait of Hormuz has remained a focal point for energy markets after disruptions linked to the U.S.-Iran conflict. Although vessel movement is resuming, Indian refiners are maintaining caution while awaiting further clarity on the durability of the ceasefire and shipping conditions.

Data compiled by Kpler showed that India’s imports of Middle Eastern crude oil price fell during the second quarter to their lowest level since at least 2013. State-owned refiners compensated for lower Persian Gulf supplies by increasing spot purchases from Russia and South America.

According to reports, the central government has not yet issued guidance on when ships can safely return to load crude cargoes from the region. State refiners generally buy Middle Eastern oil on a loading basis, requiring them to arrange shipping independently.

Russian Supplies Continue To Offer Cost Advantage

Refiners are also preparing for higher freight costs as tanker demand rises amid lingering uncertainty over shipping routes. This has increased the attractiveness of Russian crude which is generally supplied on a delivered basis.

Even with the expiry of U.S. waivers related to Russian crude purchases, Indian refiners are expected to continue sourcing barrels from Russia, having established alternative arrangements, according to reports. Russian crude is currently available at discounts of $1-$2 per barrel to Dated Brent, with expectations that discounts could widen if supply availability improves.

Shipping Activity Under Watch

Indian Oil Corporation recently issued a tender to charter a very large gas carrier, a Suezmax tanker and a very large crude carrier to transport liquefied petroleum gas and crude from ports located beyond the Strait of Hormuz, according to reports.

Market participants said the move was intended to assess vessel availability and should not be interpreted as an immediate signal that imports from the Middle East are set to resume at previous levels.

For now, Indian refiners appear focused on maintaining supply security through diversified sourcing while waiting for greater certainty on shipping routes and freight costs before increasing purchases from the Gulf region.