Sanjeev Choudhary

Crude supply disruptions are mounting for Indian refiners, marked by rising vessel attacks and transit bottlenecks in the Gulf and exacerbated by a tight tanker market, threatening timely deliveries, said people familiar with the matter.

Indian refiners face mounting crude supply disruptions from the Gulf region. Rising vessel attacks and transit bottlenecks are causing significant delivery delays. A tight tanker market further complicates securing necessary crude oil shipments. Refiners may be forced into unplanned refinery run cuts due to these issues. However, domestic fuel supply is not expected to be impacted significantly.

City gas distributor Think Gas urges a thirty percent reduction in LNG terminal usage charges. High regasification and truck loading fees currently hinder third-party LNG terminal use. The company also highlighted unreasonable boil-off gas charges imposed by terminal operators. These costs artificially inflate prices and impede natural gas market growth. Think Gas seeks moderation of charges for the proposed Indian Gas Exchange platform.

India expanded its crude sourcing to 31 countries during the six-month Iran war period, but supply concentration increased sharply as Russia's share surged to 47%. The Herfindahl-Hirschman Index rose 56% to 2,513, indicating high concentration, while nine of 10 new suppliers together contributed just 1.4% of imports.

India turned to new sources of crude during the Iran war, but adding suppliers did little to change the concentration of its oil supply around a handful of countries, led by Russia.

State oil companies are grappling with substantial bulk diesel sales losses as numerous large customers pivot to retail pumps to evade soaring prices. This behavioral shift echoes past trends observed during the US-Iran conflict. The surge in diesel rates is fueled by global supply shortages and elevated crude prices, prompting smaller contractors and businesses to adapt by purchasing through retail channels to mitigate fuel expenditures.

India is increasing domestic cooking gas production to address supply gaps. Local refiners aim to add over ten percent to current output levels. Imports through the Strait of Hormuz are now less reliable due to renewed attacks. Domestic consumption has also significantly decreased since the war began. This shift helps meet demand while mitigating import risks.

GAIL Gas employs blended pricing to keep industrial natural gas affordable. This strategy uses varied gas supplies and contractual flexibility to sustain demand. Global fuel prices have surged, impacting industrial and commercial customers significantly. Sales to industrial clients are currently ten percent below last year's levels. GAIL Gas's procurement portfolio aids in offering lower blended prices.

Indian refiners are using inventories to manage immediate oil supply disruptions. They worry about prolonged closures and widening conflicts impacting crude sourcing. Attacks on Russian ports and falling global inventories reduce buffers for supply shocks. Iran-aligned Houthis are obstructing Saudi oil shipments through the Red Sea. This compounding obstruction threatens the Strait of Hormuz oil transit.

India's natural gas imports are increasing despite higher prices this fiscal year. Demand is boosted by subsidized fertilizer and growing CNG vehicle sales. Limited alternative fuel supply and falling domestic production also contribute to this trend. Recent surges in spot LNG prices may impact future demand and consumer choices. The fertilizer sector remains the largest driver of these growing import volumes.