India’s crude imports hit five-year low amid Hormuz crisis

India’s crude imports hit a five-year low in March as the ongoing closure of the Strait of Hormuz choked supplies from key Gulf producers, as per data from the Petroleum Planning and Analysis Cell. Crude oil imports dropped 2.6% m-o-m and 17% y-o-y to 18.9 mn tons.

India’s typical crude shipments through the Strait of Hormuz — roughly 30% of its total inflows — remain impacted as the waterway enters its 50th day of near-total closure. Supplies from primary Middle Eastern partners, including Saudi Arabia, Iraq, the UAE, and Oman, have dropped significantly since the shutdown.

Russia fills the gap: To offset the shortfall, India ramped up Russian imports, aided by a temporary US sanctions waiver — purchases rose to about 2 mn bbl/ d in March compared to 1 mn bbl/ d in February, with about 60 mn barrels bought since early March. Import volumes in April are averaging at 1.67 mn bbl/ d so far.

Why it matters: India’s inventory levels have dropped sharply, with stocks down by 12 mn barrels. Meanwhile, the number of Indian refineries transitioning to Russian crude in a single month jumped from seven in February to 12 in March. The shift indicates that the technical and geopolitical hurdles to diversifying away from the Gulf have been significantly lowered.

US renews crude waiver

More Russian barrels coming: The US has unexpectedly renewed a temporary sanctions waiver allowing countries including India to continue purchasing Russian crude until 16 May, according to the US Treasury Department.

Waiver offers short-term relief: The extension permits the purchase of Russian oil loaded before 17 April until 16 May, reversing earlier signals from Scott Bessent that waivers would not be extended. The move will help maintain refinery throughput as Gulf supplies remain uncertain.

CNY for unsanctioned crude

Indian refiners settled payments on limited purchases of Iranian crude in CNY through Mumbai-based ICICI Bank’s Shanghai branch, Reuters reports, citing sources familiar with the matter.

The payment route: The transactions were structured outside the USD system, with ICICI routing CNY payments via its Shanghai branch to settle the trades. Indian refiners have used similar currency arrangements in recent Russian oil purchases, reflecting a broader shift toward alternative settlement channels under sanctions-linked constraints.

IN CONTEXT- The purchases were made by state-run Indian Oil Corporation (IOC) and Reliance Industries during a limited waived-sanctions window offered by the US covering cargoes already in transit. IOC secured a cargo of about 2 mn barrels, valued at roughly INR 16.6 bn (USD 200 mn), marking India’s first Iranian crude purchase in around seven years. IOC released around 95% of the cargo value once the vessel entered Indian waters, rather than waiting for discharge — a deviation from standard settlement practices.

Why it matters: Payment structuring remains a key constraint in transactions involving sanctioned crude from Iran and Russia, limiting participation beyond a narrow pool of buyers.

Tactical shift: The use of CNY aligns with a tactical shift by Indian refiners toward non-USD settlement channels such as AED and yuan to navigate sanctions exposure. These transactions are typically structured by routing INR through overseas accounts and converting into third currencies via offshore banking channels, allowing buyers to maintain supply flows while reducing exposure to US jurisdiction.

Gas demand falls on supply crunch

Consumption of liquefied petroleum gas (LPG) in India also declined 12.8% y-o-y to 2.3 mn tons in March, in a knock-on effect of the war amid constrained imports, PTI reports. With India importing about 60% of its LPG, largely from Saudi Arabia and the UAE, supply shortages forced rationing. Domestic LPG consumption fell 8.1% to 2.2 mn tons, while non-domestic demand plunged nearly 48%. Bulk LPG usage dropped 75.5% on the back of curbs on hotels and industry to prioritize household supply.