Middle East Conflict Drives Crude Supply Fears Amid Pipeline Shutdown

India's refiners are bracing for a potential crude supply shortage due to the ongoing Middle East conflict. The shutdown of Saudi Arabia's East-West oil pipeline, which supplied about 9% of India's imports, has already disrupted crude supplies. Indian refiners expect to use inventories to bridge the immediate supply disruption, but are increasingly worried that a prolonged closure and widening conflict will make crude sourcing more difficult and costly.

Nikhil Dubey, lead analyst at analytics firm Kpler, said, 'The situation looks grimmer than in the early weeks of the war. Then, there was hope of a quick resolution. Now, there is little visibility on how the conflict will unfold.'

The conflict has already forced Saudi Arabia to cut production by about a quarter month-on-month to 6 million barrels per day (mbd) in August.