New Delhi, June 23: Recent reports indicate that India, which maintains crude reserves sufficient for 90 days, benefits from Saudi Arabia's capability to redirect crude exports through the Red Sea. This development provides a safeguard against potential disruptions in the Strait of Hormuz.

India imports approximately 18–20 percent of its crude oil from Saudi Arabia. The Petroline-Yanbu pipeline ensures that a considerable volume of these supplies can still reach Indian refineries, even if the Hormuz route faces interruptions.

"Despite some ongoing logistical challenges and elevated freight costs, Saudi Arabia's varied export infrastructure, along with India's adaptable sourcing approach, diminishes the risk of a significant supply shortage from this crucial supplier," stated a report from Yes Securities.

With Iran's Parliament endorsing a possible closure of the Strait of Hormuz in response to US military actions against its nuclear facilities, the energy market is increasingly vulnerable to disruptions at this vital oil passage.

India relies on the Strait for over 35 percent of its crude and 42 percent of its LNG imports, making the immediate concern one of potential supply delays and rising freight costs.

"Nonetheless, India's changing import strategy offers substantial protection. Russian oil imports (2.2 million barrels per day in June) now surpass total supplies from the Middle East, with additional contributions from the US, West Africa, and Latin America that completely avoid Hormuz," the report highlighted.

India's total crude imports stand at 5.5 million barrels per day, with 2 million barrels per day (over 35 percent) sourced from the Middle East via the Strait.

Despite the logistical challenges, India's crude sourcing strategy has significantly transformed since 2022.

"Imports from Russia now exceed those from all Middle Eastern countries combined. Contributions from the US (0.44 mb/d), Brazil, West Africa, and Latin America provide alternative routes that bypass Hormuz through the Suez Canal, Cape of Good Hope, and the Pacific Ocean. India is positioned to increase supplies from Russia, the US, and other sources," the report noted.

While concerns about a complete closure of the Strait have resurfaced, historical context suggests that Iran is unlikely to fully block Hormuz.

Such an action would adversely affect its own crude exports (96 percent of which are routed through Kharg Island), alienate major partners like China (its largest buyer), and invite coordinated military responses.

"Experts assess the likelihood of a total closure as 'very low', with anticipated scenarios involving brief disruptions (24-72 hours). However, these interruptions could still lead to significant market volatility, tighten tanker availability (evident in the decrease of empty tankers bound for the Middle East and Gulf), and create risk premiums in oil and product markets," the report concluded.