Hormuz Crisis Triggers India's Emergency Pivot on Russian Oil

India's reliance on Russian oil has undergone a significant shift in recent months due to the ongoing Hormuz crisis. For nearly four years, India had been benefiting from Western sanctions on Russia, importing millions of barrels of discounted Urals crude and reducing its import bill significantly.

However, this advantage disappeared briefly in early 2026 when Russian oil started commanding a premium over Brent crude amid an unprecedented supply disruption. The crisis was triggered by the escalation of the US-Israel conflict with Iran, which severely disrupted shipping through the Strait of Hormuz, the world's most critical oil transit chokepoint.

As cargo movements from the Persian Gulf were curtailed and freight costs surged, Indian refiners scrambled to secure alternative supplies, pushing demand for Russian crude to record levels. According to S&P Global Commodity Insights, delivered Urals crude traded above Dated Brent for the first time on record in March 2026.

The shift reflected a fundamental change in pricing, with Russian crude becoming expensive due to its reliability during the regional energy crisis rather than being cheap due to sanctions. Indian state-owned refiners, including Indian Oil, Bharat Petroleum, and Hindustan Petroleum, rapidly increased purchases from Russia while also sourcing additional cargoes from Latin America and West Africa.

The scramble drove Russian crude prices sharply higher, with a premium widening dramatically as Indian and Chinese refiners competed aggressively for the limited Russian cargoes available outside the Persian Gulf supply chain. However, this premium proved temporary, and by July 2026, discounts on Urals crude had widened once again to more than $10 per barrel below Brent as supplies recovered and buyers regained multiple sourcing options.