Hormuz chaos pushes World’s third-largest oil importer into Nigeria’s embrace

India, the world’s third-largest crude oil importer, is scrambling to replace lost Middle Eastern barrels with Nigeria and other alternative suppliers, answering the call as the closure of the Strait of Hormuz continues to choke off roughly half of its traditional oil supply, forcing a realignment of one of the world’s most consequential crude import relationships.

The shift, accelerating with each passing week that the Persian Gulf chokepoint remains effectively impassable, has elevated West African producers Nigeria and Angola, alongside South American giants Brazil and Venezuela, into positions of strategic importance for Indian refiners who, until recently, relied on Iraq, Kuwait, Qatar and Bahrain for a substantial portion of their energy needs.

According to data from the global commodities-tracking firm Kpler, cited by Reuters, Indian refiners increased purchases from Nigeria, Angola, Brazil and Venezuela in April and May to offset supply disruptions in the Middle East.

India typically sourced roughly half its crude from the Middle East. That arithmetic collapsed when the Strait of Hormuz, the narrow chokepoint through which nearly a fifth of the world’s oil passes daily, became effectively impassable for most commercial tankers.

Saudi Arabia and the United Arab Emirates, the only Gulf producers with pipeline infrastructure that bypasses the strait, have managed to sustain relatively stable shipments to India. Everyone else has not.

The Reuters report stated that higher imports from Nigeria and other alternative suppliers came as India also continued to buy discounted Russian crude despite a temporary decline in Russian shipments.

Nigeria, OPEC’s largest African producer, pumps a light, sweet crude that travels well on long voyages and can be blended or processed independently at Indian facilities on the country’s west coast. Angola’s heavier grades slot into the same refining configurations. Neither country has the Strait of Hormuz problem. Neither country needs a bilateral safe-passage agreement with Tehran to move its tankers.

“Indian buyers have historically shown strong interest in Venezuelan barrels due to their attractive economics and compatibility with complex refining systems,” said Nikhil Dubey, lead analyst for refining at Kpler, in comments carried by the Economic Times — and the same logic applies to West African grades that share comparable characteristics.

India’s largest and most sophisticated refining complex, the Jamnagar site operated by Reliance Industries on the Gujarat coast, the world’s largest integrated, single-location refinery, is specifically engineered to process heavier, higher-sulfur crudes of the type that arrive from both West Africa and the Americas. That design choice, made years ago on pure commercial grounds, has become a strategic asset almost overnight.

Data from Kpler showed that India reduced crude imports from Russia by about 29.4 per cent from March levels to about 1.6 million barrels per day after Nayara Energy shut its 400,000-barrel-per-day refinery for maintenance.

However, Russian crude remained India’s largest source of oil imports, followed by the United Arab Emirates and Saudi Arabia.

India’s imports from the United Arab Emirates reportedly rebounded in April to about 669,700 barrels per day from 230,600 barrels per day in March, while imports from Saudi Arabia remained around 619,500 barrels per day.

The UAE and Saudi Arabia are among the few Gulf producers with pipeline infrastructure capable of bypassing the Strait of Hormuz for some exports.

Overall, India imported about 4.57 million barrels per day of crude oil in April, largely unchanged from March figures but about 15.5 per cent lower than the volume recorded in the corresponding period last year, according to the Kpler data.

Reuters reports that Venezuela is also on course to become one of India’s top crude suppliers in May as refiners continue to seek alternatives to Middle Eastern grades.

Last month, India reportedly halted purchases from Iraq after Iraqi exports were disrupted by the regional conflict.

The development comes amid heightened tensions in the Gulf following months of hostilities involving Israel, Iran and the United States, which have raised fears over global oil supply security and sharp volatility in international crude prices. (BusinessDay)