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India's crude oil imports have largely recovered to pre-conflict levels despite months of disruptions in the Middle East, with refiners successfully diversifying supplies by increasing purchases from Russia, the United States, Oman, West Africa and South America, according to an HSBC Global Research report.
The report says Indian refiners have adapted quickly to the supply disruptions caused by the Strait of Hormuz crisis by sourcing crude from alternative producers instead of relying heavily on Gulf supplies. "After a dip in March, Indian crude imports have broadly returned to pre-conflict levels as refiners replaced Middle East supplies with alternatives from Russia, the US, Oman, West Africa and South America," the report said. According to HSBC, Russia continues to remain an attractive supplier for Indian refiners as its crude is competitively priced. "Russian oil is trading at a small discount to Brent, making it attractive to Indian refiners." The report adds that Russian export availability has improved after Ukrainian attacks on Russian refineries curtailed domestic processing, allowing more crude to reach export markets. While Gulf oil exports are recovering following the reopening of the Strait of Hormuz, HSBC does not expect Asian refiners, including those in India, to significantly increase purchases from the region in the near term. The report notes that refiners across Asia have already secured cargoes for July and August and are entering scheduled maintenance periods, limiting immediate demand for additional spot cargoes. The report also points to India's cautious approach towards Iranian crude despite a temporary easing of US sanctions. "Indian refiners are cautious about buying from Iran unless US sanctions waivers are extended beyond August." HSBC believes the reopening of the Strait of Hormuz has created a temporary oversupply of Middle Eastern crude in global markets as stranded cargoes are being released faster than refiners can absorb them. However, it expects this "mini-glut" to fade over the coming weeks as inventories are rebuilt and strategic petroleum reserve releases come to an end. The report suggests that diversified sourcing has helped India maintain crude supplies without significant disruption, reducing dependence on Gulf producers during the crisis. The country's ability to quickly switch to discounted Russian barrels and other Atlantic Basin supplies has enabled refiners to keep imports steady while avoiding exposure to supply uncertainties in the Middle East. As Gulf markets stabilise, India is expected to continue balancing imports across multiple suppliers based on price competitiveness and geopolitical risks. (ANI)
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