The renewed military confrontation between the US and Iran has once again placed the Strait of Hormuz at the centre of global energy concerns. Fresh US strikes, Iranian retaliation, repeated threats to close the strategic waterway and another attack on a merchant vessel carrying Indian seafarers have highlighted the vulnerability of one of the world's busiest oil transit routes. For India, however, the latest crisis is unfolding under a significantly different energy landscape than the one that triggered months of global supply disruptions earlier this year.
Over the past three months, India has steadily diversified its crude oil imports, increased spot-market purchases and reduced its dependence on long-term contracts with Gulf producers. While the transition towards a more resilient energy supply chain is still underway, these measures have strengthened India's ability to cope with geopolitical disruptions.
Following the supply disruptions witnessed in March, which exposed the risks of relying heavily on Middle Eastern oil, New Delhi quietly began overhauling its energy procurement strategy. State-owned refiners expanded purchases from suppliers including Russia, the United States and West Africa, while also increasing spot-market acquisitions and seeking more flexible supply arrangements that reduce reliance on any single region.
The objective is to shield India's energy security from geopolitical shocks such as the current tensions in the Gulf. Although the Strait of Hormuz remains a critical route for global energy trade and any prolonged disruption would continue to push oil prices higher, India's broader supplier network and more flexible procurement strategy are expected to make it better prepared than it was just a few months ago.
The shift accelerated after state-owned refiners reassessed their sourcing strategy in the wake of repeated attacks on commercial shipping and disruptions linked to the US-Israel-Iran conflict. According to Bloomberg, refiners have begun reducing their dependence on long-term agreements with traditional Middle Eastern producers, while increasingly relying on short-term purchases and broader supply arrangements with global commodity trading firms that source crude from multiple regions. This approach is intended to ensure more dependable deliveries during periods of geopolitical uncertainty.
INDIA'S LONG-STANDING RELIANCE ON MIDDLE EASTERN CRUDE
India remains one of the world's most import-dependent energy consumers, sourcing nearly 90 per cent of its crude oil requirements, equivalent to around five million barrels per day, according to Reuters.
For decades, a significant share of these imports has come through long-term contracts with Middle Eastern producers such as Saudi Arabia and Iraq. Under these agreements, which typically span several years, state-owned refiners receive fixed monthly volumes of crude at prices linked to global benchmarks including Brent and Dubai crude. These arrangements provide supply stability for India while ensuring consistent demand for producing nations.
Bloomberg reports that state-owned refiners such as Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited meet more than half of their crude requirements through such long-term contracts, while the remainder is sourced through spot-market purchases.
However, these long-term agreements are now being reassessed. The Iran conflict exposed the risks associated with India's heavy dependence on Middle Eastern supplies, as disruptions to regional energy flows resulted in tighter supplies, higher crude prices and mounting financial pressure on refiners.
India's strategic petroleum reserves also proved inadequate to fully cushion the impact, prompting an extensive diplomatic effort to secure energy supplies. External Affairs Minister S Jaishankar visited the United Arab Emirates in April, followed by Prime Minister Narendra Modi's visit a few weeks later. National Security Adviser Ajit Doval travelled to Saudi Arabia during the same period, while Petroleum Minister Hardeep Singh Puri visited Qatar to strengthen energy cooperation.
India's efforts to protect its economic and energy interests have since expanded beyond the Gulf region. Commerce and Industry Minister Piyush Goyal is currently on a five-day visit to Spain, Belgium and Finland to strengthen trade and investment ties across sectors including renewable energy, semiconductors, advanced manufacturing, clean technologies and critical industrial supply chains.
The outreach reflects New Delhi's broader strategy of reducing vulnerabilities exposed by recent geopolitical crises by building stronger partnerships with a wider group of countries and creating more resilient supply chains.
WHY RUSSIAN OIL ALONE CANNOT MEET INDIA'S NEEDS
Although the Middle East has traditionally been India's principal source of crude oil, Russian imports have grown sharply since 2022.
The shift followed Russia's invasion of Ukraine, after which European countries significantly reduced purchases of Russian energy. Moscow responded by offering crude at discounted prices, allowing India to increase imports while managing rising costs associated with Middle Eastern supplies. The United States also informally supported these purchases to help prevent a sharp increase in global oil prices.
The latest US-Iran conflict further accelerated India's reliance on Russian crude as disruptions to energy flows and temporary interruptions in shipping through the Strait of Hormuz tightened global supplies.
Bloomberg recently reported that temporary US waivers permitting purchases of Russian crude have eased some supply pressures. Data from LSEG and Kpler, cited by Reuters, showed that Indian refiners imported approximately 2.7 million barrels per day of Russian oil in July, up from 2.13 million barrels per day in May.
Despite the increase, Indian refiners continue to diversify their supply sources. Much of the Russian crude imported during May and June had already been loaded before the latest disruptions. Moreover, Russia's capacity to sustain exports is facing increasing strain because of the ongoing war in Ukraine.
In recent months, Ukraine has stepped up drone attacks on Russian energy infrastructure, targeting refineries, oil storage facilities and export terminals, particularly along the Baltic coast, including the strategically important Primorsk oil terminal. One attack in June also set a refinery near Moscow on fire.
The strikes have contributed to fuel shortages across Russia. Reuters reported that petrol rationing has been introduced in parts of Russian-occupied Ukraine, Crimea, southern Russia and Siberia. President Vladimir Putin has acknowledged that Ukrainian attacks have disrupted domestic fuel supplies, while Reuters reported that Moscow is considering fuel imports to ease shortages.
Those imports have already begun, with several countries supplying fuel to Russia, including India. Reuters reported, citing industry sources, that India has exported between 60,000 and 70,000 metric tonnes of gasoline to Russia.
INDIA'S THREE-PRONGED OIL DIVERSIFICATION STRATEGY
The first pillar of India's strategy involves expanding its supplier base. According to Bloomberg, Indian refiners are actively exploring additional crude supplies from countries including Guyana, Brazil and the United States.
The diversification had already begun by April, when Bloomberg, citing Kpler data, reported that India imported an estimated 12.51 million barrels of Venezuelan crude during the month. The shipment represented the highest monthly import volume from Venezuela since February 2020 and marked India's first purchase from the South American producer since May 2025.
The second pillar is a gradual shift away from long-term contracts towards spot-market purchases. Bloomberg reported that Indian refiners are planning to reduce the share of crude sourced through long-term agreements and increase purchases through the spot market.
Spot-market transactions involve buying crude oil already loaded on tankers for immediate or near-term delivery, usually within a few weeks. Unlike long-term supply contracts, these deals offer greater flexibility by allowing buyers to respond to prevailing market conditions without committing to fixed purchase volumes over several years.
The third component involves sourcing crude through global commodity trading firms rather than negotiating directly with producing countries.
This transition began earlier this year when Reliance Industries, which operates the Jamnagar refinery—the world's largest refining complex—purchased at least two million barrels of Venezuelan crude through commodity traders Trafigura and Vitol.
Similarly, Bharat Petroleum signed an agreement with Trafigura to procure Iraqi crude beginning in April, while Bloomberg reported that Indian Oil Corporation is establishing a trading desk in partnership with Vitol Group.
Vitol is among the world's largest independent energy trading companies, handling an average of approximately eight million barrels of crude oil and petroleum products every day, equivalent to nearly 400 million metric tonnes annually.
These commodity trading firms procure and store crude from producers across multiple regions and can rapidly redirect supplies during disruptions. This flexibility enables Indian refiners to respond more effectively to geopolitical crises while reducing dependence on any single supplier or region.
If fully implemented, these measures would represent one of the most significant transformations in India's crude procurement strategy in recent years. Whether the new approach can substantially reduce India's exposure to future disruptions in global energy supplies will become clearer as geopolitical uncertainties continue to evolve.
