India's Oil Import Bill Jumps Nearly 70% as Global Crude Spike Fueled by Middle East Tensions

India's Oil Import Bill Jumps Nearly 70% as Global Crude Spike Fueled by Middle East Tensions​

Massive Surge in Crude Import Costs​

India’s crude import bill witnessed a dramatic escalation, surging 69.8 percent to $35.5 billion during the April-May period. This sharp increase is primarily attributed to global crude prices breaching the $100 per barrel mark due to ongoing tensions stemming from the Iran war.

This cost hike occurred despite some moderating factors, including a 1.4 percent decline in the volume of crude imports. Volumes dropped to 41.7 million tonnes, down from 42.3 million tonnes in the previous year.

As the world's third-largest crude importer, India relies on imports for more than 85 percent of its total requirement. The disruption caused by the war and the blockade of the Strait of Hormuz significantly impacted supply chains originating from West Asia.

Volatility in Global Crude Pricing​

The benchmark Brent crude oil showed considerable volatility during April. Following announcements of a temporary ceasefire between the US and Iran, Brent briefly dipped to around $90 on April 17. However, fears of renewed hostilities caused prices to spike to $126.41 on April 30. The monthly average price for Brent crude was reported at approximately $117 per barrel.

In May, crude prices remained above the $110 threshold during the first half of the month. This momentum subsequently dipped when oil plunged to $92.05 a barrel by the end of the month on rising optimism regarding peace developments.

The data from the Petroleum Planning and Analysis Cell (PPAC) indicates that the average price of India's crude imports was $106.23 per barrel in May, compared to $114.48 per barrel in April, reflecting elevated international commodity prices.

Impact on Natural Gas and LNG Imports​

The conflict in West Asia also adversely affected India’s natural gas market. Imports of natural gas saw a 19 percent decline across the first two months of FY27, totaling 4,532 million standard cubic meters (mmscm). The corresponding gas import bill decreased by 4 percent to $2.2 billion.

LNG imports faced significant challenges after Iran's strikes extensively damaged QatarEnergy’s main gas facility at Ras Laffan. This incident is particularly critical as Qatar remains India’s largest supplier, accounting for 45 percent of the country’s natural gas needs.

Senior government officials have indicated that in response to potential prolonged global gas supply recovery concerns, India is diversifying its sourcing. The focus has shifted towards Canada and the United States while also engaging with emerging LNG suppliers such as Brazil and Mozambique.

Differential Recovery Paths for Oil and Gas​

Experts suggest a difference in how quickly oil flow and gas flows will stabilize. Crude markets are expected to regain stability faster than gas supplies. This is due to the availability of flexible shipping routes, positioned cargoes, and existing inventories in transit.

However, industry sources caution that gas flows anticipate a slower and more complex recovery trajectory. The recovery depends heavily on production assessments rather than solely on the reopening of established maritime routes.

Petroleum Product Exports Take a Hit​

The West Asia conflict extended its effects beyond imports, negatively impacting the country’s petroleum product exports. These exports declined by 26 percent to 7.2 million tonnes.

Despite the volume decline, the value of these exports managed to rise significantly, growing 45 percent to $8.3 billion from the previous year. This highlights a complex interplay between supply constraints and market pricing in the international petroleum trade.