India’s energy outlook has received a temporary boost amid the ongoing Middle East crisis, as refiners prepare to resume purchases of Iranian crude following a limited US sanctions waiver. The move comes at a time when global oil prices have surged past $100 per barrel due to disruptions in the Strait of Hormuz, a critical route that carries a significant share of the world’s oil supply.
The US decision allows the sale of Iranian oil that is already loaded on ships, to ease supply constraints and stabilise global markets. Indian refiners, which rely heavily on imports, are now exploring this opportunity. India imports nearly 90 per cent of its crude oil, with a substantial portion traditionally sourced from the Gulf region, making it highly sensitive to disruptions in West Asia.
Before sanctions were imposed in 2018, Iran was a key supplier to India, accounting for over a tenth of its total crude imports. Indian refineries are technically well-equipped to process Iranian grades of oil, which makes reintroducing these supplies relatively seamless compared to switching to entirely new sources.
At the same time, India has already increased its intake of discounted Russian oil, particularly cargoes that were stranded at sea due to earlier sanctions. This dual approach—tapping both Russian and potentially Iranian supplies—reflects an effort to diversify sourcing and manage price volatility during the crisis.
However, uncertainty remains. Iran has indicated that it may not currently have surplus crude available for export, contradicting expectations created by the US waiver. This raises questions about how much oil will actually reach global markets and whether the policy shift will have a meaningful impact on supply.
The situation also highlights a broader strategy by Iran to exert pressure by disrupting energy flows, particularly through the Strait of Hormuz. This has contributed to rising costs and volatility, complicating planning for importing countries like India.
For now, Indian refiners are awaiting further clarity from the government, especially on payment mechanisms and regulatory conditions tied to the US waiver. While the development offers a potential short-term relief, the overall energy scenario remains uncertain, with supply availability, geopolitical tensions, and pricing pressures continuing to evolve.
