Can Saudi Arabia and Russia Ensure Oil Supply Continuity for India Amid Uncertainty in Hormuz?

New Delhi, June 23 (NationPress) For India, which reportedly maintains crude reserves for 90 days, Saudi Arabia's capacity to redirect crude exports through the Red Sea presents an essential layer of supply stability in light of the uncertainties surrounding the Strait of Hormuz, according to a report released on Monday.

India sources 18–20 percent of its crude from Saudi Arabia, and the Petroline-Yanbu corridor guarantees that a considerable volume of these shipments can still reach Indian refiners, even if disruptions occur in the Hormuz route.

According to the report from Yes Securities, "While some logistical challenges and increased freight costs may continue, Saudi Arabia's diversified export infrastructure, paired with India's adaptable sourcing strategy, minimizes the chance of a significant supply shortfall from this critical partner."

With Iran’s Parliament endorsing a possible closure of the Strait of Hormuz following US strikes on its nuclear sites, energy markets confront escalating risks of disruption at one of the world’s most vital oil channels.

For India, which acquires over 35 percent of its crude and 42 percent of its LNG through this strait, the immediate concern is related to potential supply delays and rising freight costs.

"Nonetheless, India's changing import mix provides a robust safety net—Russian inflows (2.2 million barrels per day in June) now surpass total supplies from the Middle East, with contributions from the US, West Africa, and Latin America avoiding the Hormuz route altogether," the report highlighted.

India imports 5.5 mb/d of crude oil, with 2mb/d (over 35 percent) coming from the Middle East via the Strait of Hormuz.

Despite this logistic vulnerability, India's crude sourcing strategy has significantly transformed since 2022.

"Russian imports now exceed those from all Middle Eastern suppliers combined. Increases from the US (0.44mb/d), Brazil, West Africa, and even Latin America provide alternative routes that circumvent Hormuz via the Suez Canal, Cape of Good Hope, and the Pacific Ocean. India could ensure increased supplies from Russia, the US, and other regions," the report stated.

While fears of a complete closure have re-emerged, historical trends indicate that Iran is unlikely to entirely blockade Hormuz.

Such an action would adversely affect its own crude exports (with 96 percent routed via Kharg Island), alienate key partners like China (its largest buyer), and invite coordinated military responses.

Experts assess the likelihood of a full closure as "very low," suggesting that probable scenarios will involve brief disruptions (24-72 hours). However, these interruptions could still create substantial volatility, tighten tanker availability (already evident in the decline of empty tankers bound for the Middle East and Gulf), and introduce risk premiums in oil and product markets, according to the report.