June crude imports show Russia widening its lead over MENA suppliers

Indian refiners imported 4.9 mn bbl/d of crude oil last month, the highest June volume on record, Hindu Businessline reports, citing Kpler data. Russian crude accounted for more than half of the imports, with shipments rising to around 2.6 mn bbl/d from 2.13 mn bbl/d in May, highlighting that Moscow’s barrels remained the mainstay of India’s energy supply despite the gradual reopening of the Strait of Hormuz.

The Gulf stayed in the mix, but on India’s terms. As we reported last month, refiners had already reduced direct Strait of Hormuz-linked exposure and leaned on alternative routes — including Fujairah in the UAE and Yanbu in Saudi Arabia. However, import volumes remain lower than pre-war levels.

Why it matters: India imports more than 88% of its oil and is the world’s third-largest crude importer and consumer. June imports suggest that Russian crude continues to eat market share of MENA producers even as shipping and supply risks linked to Hormuz have eased. Even as Iranian barrels are on offer for Indian refiners, Kpler does not expect a meaningful return of these barrels in the near term given the sanctions overhang.

What’s next? Even as Russia has maintained its position as the leading oil supplier to India, these imports are made possible by sanction waivers granted by the US administrations. As the global crude supply eases, the US is likely to reimpose sanctions and push Indian buyers back to suppliers closer to home. However, a meaningful pickup won’t happen in the coming weeks as refiners have already covered most crude requirements through the first half of August, Kpler told the daily.

No relief at the pump: India’s Petroleum and Natural Gas Minister Hardeep Singh Puri shot down hopes of cheaper fuel at retail pumps anytime soon, saying that retail fuel prices will come down “only if lower crude prices prove durable”. This will give state-run oil marketing companies time to recover their losses as they purchased crude oil at higher prices in recent months, Hindu reports.

“Refiners are processing crude oil which was bought two or two and a half months back, when the prices were high[...] A fuel price cut can be looked at if oil prices remain at low levels for a sustained period,” Puri told the daily. Brent crude price is hovering around USD 70 / bbl, plunging from a peak of USD 126 / bbl.

Nursing losses: State-owned refiners suffered losses worth INR 748 bn (USD 7.9 bn) during the April-June period, as per government estimates, as they absorbed higher fuel costs instead of fully passing them on to consumers. While India’s biggest private fuel retailer, Nayara Energy, has cut petrol prices, state-owned OMCs are yet to follow suit.

New Delhi is planning to expand its strategic petroleum reserves (SPRs), build larger crude inventories, and deepen supply partnerships after the recent US-Iran war nearly choked its supplies. “I’m not worried about it, but I have to prepare for it,” Puri told Bloomberg.

The government has already set up a committee to study details including potential locations, operating models, and the split between overground and underground storage. The ministry is likely planning five new SPR facilities and has signed a new partnership with Japan on strategic petroleum reserves and energy logistics.

Falling behind: India currently holds about 39 mn bbls in strategic reserves, which is enough to cover roughly eight days of crude imports. In contrast, China holds some 1.4 bn bbls of reserves.