Middle Eastern crude accounted for about 54% of India's total oil imports in September, up from 32% in August, as shipments through the Strait of Hormuz picked up following supply disruptions caused by the Iran war.
Also read: Indian Oil to trim Middle East oil imports under annual deals amid Iran war
India, the world's third-largest oil importer, had initially increased purchases of Russian crude to compensate for reduced supplies from the Middle East after the conflict disrupted shipments. But the recovery in Gulf supplies has prompted refiners to return to the region for competitively priced cargoes.
Imports of Middle Eastern crude rose to around 2.8 million barrels per day (bpd) in September, their highest level since February, the data showed.
Russian oil loses some of its price advantage
In contrast, India's imports of Russian crude fell about 14% month-on-month to approximately 1.8 million bpd in September. Russia's share of India's oil purchases dropped to 33.5% from 46.6% in August.Russian oil purchases are likely to remain subdued in the coming months as the landed cost of Russian crude has become comparable to that of some Middle Eastern grades, particularly Iraqi oil, an Indian refining source said.
Discounts on Russian crude have narrowed, with its premium against Brent crude falling to $1-$2 per barrel from more than $10 in recent months as Middle Eastern supplies returned to the market, the source added.
Refiners are likely to maximise purchases of discounted Gulf crude, given shorter voyage times and price cuts by some producers to offset rising freight costs, the source said.
"We will buy from whoever offers us better prices," the source said.
Also read: India is set to rewrite its oil destiny, moving from risk to leverage
Iraq oil flows back into India's crude basket
India's overall crude imports rose 20% month-on-month to around 5.33 million bpd in September, the data showed.Russia remained India's largest oil supplier, followed by the United Arab Emirates and Iraq. Imports of Iraqi crude surged to approximately 830,000 bpd in September, from 171,000 bpd in August, reflecting the sharp recovery in supplies from the Middle East.
The rebound in Gulf shipments has given Indian refiners more options as they weigh crude prices, freight costs and delivery times. With Russian oil's price advantage diminishing, refiners are increasingly positioned to choose between suppliers based on the economics of individual cargoes.
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