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FinanceIndia halts Iraqi crude loadings as Strait of Hormuz risk escalates
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India's largest state-owned refiners, Indian Oil Corp. and Mangalore Refinery & Petrochemicals, have suspended crude loadings from Iraq due to escalating attacks on commercial tankers in the Strait of Hormuz. Indian Oil abandoned plans to load the VLCC Lila Jamnagar, deeming the risk of transiting the chokepoint with a 2-million-barrel cargo unacceptable. The Indian shipping ministry has also banned Indian seafarers from vessels transiting Hormuz. This disruption accelerates India's shift to alternative suppliers: Russian crude imports are near record highs at 2.45 million barrels per day, while UAE and Saudi supplies remain resilient due to pipeline bypasses. Iraq, lacking such alternatives, faces stranded supply. The crisis has pushed Brent crude above $90 per barrel, compounding risks from Houthi naval blockades in the Red Sea. India, which imports over 85% of its oil, is not yet short of crude but faces a strategic realignment away from Middle Eastern dependence.
Source report
India's largest state-owned refiners are no longer willing to risk transiting the Strait of Hormuz, following a series of attacks on commercial tankers that have made the critical oil chokepoint increasingly dangerous and costly.
Indian Oil Corp. and Mangalore Refinery & Petrochemicals have suspended crude loadings from Iraq, according to a report by Bloomberg.
- Indian Oil abandoned plans to load the VLCC Lila Jamnagar, concluding that sending a fully laden 2-million-barrel tanker through the Strait of Hormuz was no longer worth the risk.
- Mangalore Refinery has also halted Iraqi liftings as security conditions in the region continue to deteriorate.
The New Reality for Crude Buyers
The decision highlights a pressing question for today's crude buyers: Is it worth sailing through Hormuz to pick up oil, assuming supply is available?
India relies on imports for more than 85% of its oil consumption. Before the Iran conflict, roughly half of those barrels came from the Middle East. Iraq has traditionally been one of India's largest suppliers under long-term contracts that require Indian refiners to arrange shipping. That arrangement becomes far less attractive when tankers are being struck by projectiles.
India's shipping ministry has already instructed shipowners and recruitment agencies not to deploy Indian seafarers on vessels transiting the Strait of Hormuz until further notice.
Accelerating the Search for Alternatives
The pullback is accelerating India's search for alternative crude sources:
- Russian crude continues flowing into India at near-record levels of approximately 2.45 million barrels per day this month, according to data from Kpler.
- Supplies from the UAE and Saudi Arabia have remained relatively resilient, as both countries can bypass Hormuz for part of their exports via pipelines to Fujairah and Yanbu.
- Iraq, however, has no such workaround.
Market Impact
The latest disruption comes as Brent crude trades back above $90 per barrel, following another attack on a tanker in the Strait and a Houthi naval blockade targeting Saudi shipping in the Red Sea.
India is not yet short of crude. However, if buyers begin walking away from Iraqi oil due to safety concerns, another piece of Middle Eastern supply could effectively become stranded—without a single well shutting down.
By Julianne Geiger for Oilprice.com
Source
OilPrice.com Daily News UpdateWestern
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India Halts Iraqi Oil Loadings as Strait of Hormuz Becomes Too Dangerous