With Red Sea disrupted, India may have to import more Russian oil. That comes with risks
Attacks and threats by Yemen's Houthi forces in the Red Sea and Bab-el-Mandeb Strait have led some Saudi-linked crude tankers bound for India and China to turn back or reroute
The disruption raises freight costs and delivery times for crude sourced from the Persian Gulf/Red Sea route, pushing Indian refiners to increase reliance on Russian crude, which largely avoids this chokepoint
Russian crude has become India's largest single source of oil supply since 2022, following Western sanctions that redirected discounted Russian barrels toward Asian buyers
Increased dependence on Russian oil carries risks, including exposure to G7/EU price-cap enforcement, secondary sanctions on tankers and shipowners, and narrowing price discounts as global buyers compete for Russian barrels
India's Crude Oil Import Dependency
India imports the overwhelming majority of its crude oil requirements, making energy security a central concern of its foreign and economic policy. As the world's third-largest oil consumer, India's import dependence has been rising, exposing the economy to global price and freight shocks.
Key Details
- India imports roughly 85-89% of its crude oil needs (import dependency ratio), making it highly sensitive to global supply disruptions
- India is the world's third-largest consumer and importer of crude oil, after the US and China
- Strategic Petroleum Reserves (SPR) are maintained at Vizag, Mangalore, and Padur under the Indian Strategic Petroleum Reserves Limited (ISPRL), a mechanism to cushion short-term supply shocks
- Diversification of crude sources (Middle East, Russia, US, Africa) is a stated energy-security goal to reduce chokepoint dependence
The Red Sea disruption illustrates how a single maritime chokepoint incident can affect India's energy security, reinforcing the policy rationale for diversifying crude sources and maintaining strategic reserves.
Bab-el-Mandeb Strait and Red Sea as a Maritime Chokepoint
The Bab-el-Mandeb Strait connects the Red Sea to the Gulf of Aden and the Arabian Sea, forming part of the shortest sea route between the Persian Gulf/Indian Ocean and Europe via the Suez Canal. It is one of the world's recognised maritime "chokepoints" alongside the Strait of Hormuz, Strait of Malacca, and the Suez Canal itself.
Key Details
- A significant share of global seaborne oil trade transits the Bab-el-Mandeb Strait annually, making it a strategic vulnerability for oil-importing nations
- Alternative routing around the Cape of Good Hope (southern tip of Africa) substantially lengthens voyage time from the Persian Gulf to India, raising freight and insurance costs
- Houthi attacks on shipping in this corridor since late 2023 have periodically disrupted container and tanker traffic, prompting naval escort missions by several countries
- Distinct from the Strait of Hormuz (between Iran and Oman), through which a large share of the world's seaborne crude oil passes, including much of India's Gulf-sourced crude
The Red Sea disruption is a chokepoint-specific shock; India's response of leaning more on Russian crude (which typically does not transit Bab-el-Mandeb) is a direct hedge against this geographic vulnerability.
G7/EU Price Cap on Russian Crude Oil
Following Russia's invasion of Ukraine, the G7, EU, and Australia imposed a price cap mechanism on seaborne Russian crude oil exports, restricting Western shipping, insurance, and financial services to cargoes sold at or below the cap. This is distinct from a direct import ban and was designed to keep Russian oil flowing to global markets while limiting Russia's revenue.
Key Details
- The original G7/EU price cap on Russian crude was set at $60 per barrel, effective December 2022
- The EU subsequently lowered the cap for Urals-grade crude (to around $47.6 per barrel in 2025), tightening the enforcement band
- The mechanism relies on Western insurers, shipowners, and financial intermediaries refusing service above the cap, giving rise to a "shadow fleet" of tankers using non-Western insurance to bypass it
- The US and EU have periodically expanded sanctions on tankers and shipowners carrying Russian crude, raising compliance risk for Indian refiners and freight operators
Greater reliance on Russian crude increases India's exposure to price-cap enforcement actions and tanker sanctions, which is the "risk" side of the described trade-off.
- India imports approximately 85-89% of its crude oil requirements
- India is the world's third-largest oil consumer and importer
- G7/EU price cap on Russian seaborne crude: originally $60/barrel (Dec 2022), lowered to around $47.6/barrel for Urals crude in 2025
- Alternate routing via the Cape of Good Hope can extend a Gulf-to-India crude voyage from about 8 days to nearly 39 days
- Russian crude has risen from roughly 2% of India's oil imports before 2022 to becoming India's largest single supplier source since the war began
- India maintains Strategic Petroleum Reserves at Visakhapatnam, Mangaluru, and Padur under ISPRL