India's Crude Imports Return to Pre-War Levels as Refiners Pivot Away from Gulf Oil

The Crisis That Forced India's Hand

For a country that imports 88 percent of its crude oil, roughly 1.8 billion barrels annually, a war choking off the Strait of Hormuz is not an abstract geopolitical problem. It is a daily supply emergency.

According to a Times of India analysis published June 25, 2026, India was pulling in approximately 2.4 million barrels per day from Gulf producers in fiscal year 2025-26, representing about 48 percent of its total daily crude intake of 5 million barrels. When the Strait was disrupted, that entire block of supply was suddenly at risk.

The U.S.-Iran conflict that triggered the crisis has since wound down. A memorandum of understanding signed by President Trump and Iranian President Pezeshkian on June 16 launched a 60-day roadmap toward a broader agreement. Strait of Hormuz traffic has resumed, with roughly 90 ships transiting on June 23 alone, according to the Times of India. U.S. sanctions on Iranian crude sales have been suspended at least through August 21, and Iran has committed to allowing IAEA inspectors back into the country.

The immediate shock is over. The longer-term lesson is still being absorbed.

Where India Found Its Oil

Indian refiners did not wait for diplomats to sort things out. According to an HSBC Global Research report cited by Chinimandi, after a dip in March, crude imports have broadly returned to pre-conflict levels. Refiners replaced disrupted Middle East supply by ramping up purchases from Russia, the United States, Oman, West Africa, and South America.

Russia remains the standout alternative. HSBC notes that Russian crude is trading at a small discount to Brent, making it competitively attractive. Russian export availability has also improved because Ukrainian attacks on Russian refineries curtailed domestic processing inside Russia, freeing up more crude for export markets. Indian refiners are buying on price, not politics.

HSBC does NOT expect Asian refiners, including India's, to significantly increase purchases from the Gulf in the near term, even with the Strait now open. Refiners across Asia have already secured cargoes for July and August and are heading into scheduled maintenance periods. There simply is not much near-term appetite for additional spot cargoes from the Middle East.

The Iranian Wildcard

The sanction suspension on Iranian crude is temporary. HSBC's report states plainly that Indian refiners are cautious about buying from Iran unless U.S. sanctions waivers are extended beyond August. Locking in Iranian supply relationships, only to have Washington reimpose sanctions two months later, is a compliance and reputational risk Indian state refiners are not eager to run.

The consequence is direct. The diplomatic process between Washington and Tehran carries direct financial implications for India's energy bill.

The Mini-Glut No One Is Celebrating

The reopening of the Strait has created a temporary oversupply problem. According to HSBC, stranded Middle Eastern cargoes are being released faster than refiners can absorb them, producing a short-term glut of Gulf crude. The bank expects this to fade over coming weeks as inventories rebuild and strategic petroleum reserve releases wind down.

Brent crude rose 0.6% to $72.44 per barrel, according to TradingView, with the modest gain driven by residual concerns about Hormuz shipping risk following the latest U.S.-Iran exchange of strikes. A Washington-Tehran agreement to suspend further attacks ahead of a potential meeting in Qatar has capped further price gains.

The Indian rupee is feeling the pressure on two fronts: higher oil prices weigh on import costs and currency demand. The rupee hovered around 94.3 per dollar, according to TradingView, with market participants also watching for India's May industrial output data, a Manufacturing PMI release later this week, and the U.S. June nonfarm payrolls report, which could shift Federal Reserve rate expectations and, in turn, dollar strength.

The Strategic Pricing Reserve Argument

The strongest criticism of India's current posture comes from analysts who argue that price diversification is not the same as energy security. Col. Rajeev Agarwal (Ret.), Senior Research Consultant at CRF, writing in the Times of India, argues that India needs to move beyond physical Strategic Petroleum Reserves, which store crude against supply shocks, and develop what he calls Strategic Pricing Reserves: pre-secured long-term contracts and financial instruments that lock in favorable prices before the next crisis hits. His case is that India repeatedly pays a war premium on oil because it has no pricing leverage, only volume alternatives.

That argument deserves a fair hearing. Critics of this view would counter that long-term pricing contracts reduce flexibility and can strand India in unfavorable positions if market prices fall sharply, as they have since the Hormuz crisis eased. Spot-market agility, the same flexibility that let refiners pivot to Russian and Atlantic Basin barrels in March, is also an asset. Both positions have merit. The resolution depends on how India balances hedge costs against supply security.

The Open Question

The 60-day U.S.-Iran roadmap runs through mid-August, the same window as the temporary Iranian sanctions waiver. Whether Washington extends that waiver, and whether Iran's nuclear and ballistic missile programs can be negotiated down to a durable deal, will determine whether the Strait of Hormuz stays open, whether Iranian crude becomes a reliable option for Indian refiners, and ultimately whether the diversification India built under duress becomes a permanent structural shift or a temporary detour.