Saudi Aramco crude supply to India
The disruption in the Strait of Hormuz has created another major challenge for global oil markets. Saudi Arabia’s East-West Oil Pipeline, an important alternative route that bypasses Hormuz, was also shut after recent drone attacks.
The development has now directly affected Indian refiners. According to an Economic Times report, Saudi Aramco has halted crude oil supplies to Indian refiners until further notice. The immediate concern for India, however, is not necessarily a physical shortage of crude, but the higher cost of securing replacement supplies.
The Strait of Hormuz is one of the world’s most important oil shipping chokepoints. Shipping activity through the strait has fallen sharply amid the ongoing conflict. Preliminary vessel-tracking data showed only three commercial vessels transited the waterway on September 16.
Saudi Arabia had been relying more heavily on its East-West Pipeline as an alternative route. The roughly 1,200-km pipeline connects the kingdom’s major oil-producing region in the east with Yanbu on the Red Sea coast, allowing crude to bypass Hormuz.
The pipeline was temporarily shut following drone attacks in the Riyadh and Madinah regions. Saudi authorities said the shutdown was a precautionary measure while emergency and technical teams assessed the situation.
It is important to distinguish the different attacks in the region. The recent pipeline attack has not been confirmed as a direct Houthi attack. Saudi and Iraqi statements linked the incident to drones originating from Iraq, while Yemen’s Iran-aligned Houthis have separately intensified attacks around the Red Sea and against Saudi targets.
Saudi Aramco’s decision has created uncertainty for Indian refiners that rely on Saudi crude. India, however, has a diversified crude import basket and can potentially replace some Saudi volumes with supplies from Iraq, the UAE and other producers.
The bigger challenge is cost.
Alternative crude cargoes may be more expensive, while freight and insurance costs have risen because of the wider disruption in Middle Eastern shipping routes. Asian refiners are already preparing for tighter supplies of sour crude and higher procurement costs.
Some Gulf crude is also being moved through alternative arrangements involving ship-to-ship transfers near Oman’s Sohar port. Such routes can keep supplies moving, but they involve additional logistical complexity and higher transportation costs.
For India, the impact could therefore emerge through the import bill and refining economics rather than an immediate shortage of crude.
Saudi Arabia remains one of India’s important crude suppliers. Indian Express, citing tanker data, reported that Saudi crude accounted for around 7-8% of India’s total oil imports in recent months.
If the Aramco suspension continues for an extended period, Indian refiners will have to increase purchases from alternative suppliers. That could raise procurement costs, particularly if global crude prices remain elevated.
For now, India is relying on diversified sourcing and existing inventories to manage immediate supply risks.
Global oil prices, meanwhile, remain highly volatile. On September 17, Brent crude fell to around $104.33 per barrel as concerns over supply disruptions eased somewhat. Saudi Arabia has been exploring additional loading arrangements through Oman, while efforts are also underway to restore the East-West Pipeline.
The key risk for India is therefore not an immediate crude shortage, but higher oil prices, rising freight costs and prolonged supply uncertainty. If disruptions around Hormuz and the Red Sea continue, the pressure could eventually extend to India’s import bill, inflation and fuel-market economics.
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