US-Iran war impact: India adds new suppliers amid crude supply disruption, but only 5 nations control imports — Check

The US-Iran war, now in its seventh month, has caused major disruptions for countries that rely heavily on crude oil imports from the Middle East. India has been forced to diversify its sources of supply as disruptions to global oil flows threaten its energy security.

While Indian refiners have turned to new suppliers to keep crude supplies flowing, the shift has done little to reduce the country’s dependence on a handful of major exporters, with Russia continuing to lead the pack.

India adds new suppliers

Citing data from the analytics firm Kpler, The Economic Times reported on Tuesday that nine of India's 10 new suppliers together account for roughly 1.4 per cent of crude imports during the six months of the US-Iran war, between March and August. The only exception was Venezuela, which accounted for roughly five per cent of crude imports.

Despite diversifying its crude import sources and adding new suppliers, New Delhi sourced most of its crude oil from a small group, with the top five nations accounting for 76 per cent, down from 79 per cent in the preceding six months.

India’s HHI jumps 56% despite new suppliers

In the March-August period, the Herfindahl-Hirschman Index (HHI), which measures the concentration of India's crude oil suppliers, jumped 56 per cent to 2,513 from 1,606 in the preceding six-month period, despite the increase in suppliers. Meanwhile, India's crude imports declined 5 per cent to 4.77 million barrels per day.

An HHI of more than 2,500 implies a higher concentration of suppliers, whereas an HHI of less than 1,500 represents low concentration. According to the report, the increase has been primarily driven by Russia, whose share of India's crude imports jumped to 47 per cent during March-August, up from 29 per cent in the preceding six months.

India changes composition of its top suppliers

Following the disruptions caused by the war, New Delhi has reworked the composition of its top five suppliers, with Brazil and Venezuela replacing the US and Nigeria. At the same time, Russia, Saudi Arabia, and the United Arab Emirates (UAE) remain the leading suppliers.

In the last six months, New Delhi sourced crude oil from 31 countries to meet its demand, up from 24 countries in the preceding six months. During the period, 10 new countries entered India's supply mix, whereas three nations that previously supplied crude were no longer among its sources.

Apart from Venezuela, India's new suppliers have remained marginal, with countries like Iran, Ecuador, the Bahamas, Algeria, the Netherlands, Canada, and others mostly supplying crude in only one of the six months.

India turns to Venezuela amid disruptions

Last month, news agency PTI reported that New Delhi turned to Caracas to broaden its crude oil sourcing as the US-Iran war and disruptions in the Strait of Hormuz pushed the world's third-largest oil consumer to diversify its supplies. In August, Venezuela's crude imports rose sharply, making the South American producer India's fourth-largest supplier.

Saudi Arabia's crude supplies fell around 300,000 barrels per day (bpd), with the shortfall partly balanced by the resumption of Venezuelan shipments at 233,000 bpd and a 50,000 bpd rise in imports from Angola. US supplies also dropped by roughly 200,000 bpd, while increased shipments from Oman and Brazil helped make up some of the gap.

Among India's major suppliers, Iraq witnessed the steepest decline, with its share falling to around two per cent from 18 per cent. Baghdad's 820,000 bpd drop in imports was largely offset by a 770,000 bpd rise in Moscow supplies, which reached 2.25 million bpd.

Russia vows to meet India's crude demand

Moscow, which continues to be New Delhi's top supplier, on Monday said that it stands ready to supply India with "as much oil as it needs." The remarks were made by Russian Ambassador to Delhi, Denis Alipov, who said, “We would be ready to supply as much oil as India needs. Unfortunately, those who impose sanctions and tariffs have taken the path of pressure tactics instead of honest cooperation, which prevents those countries from offering a better deal to India in oil than the US,” ANI reported.