Attacks in the Red Sea by the Houthis may hit India’s oil trade | Data

The Iran-supported Houthis in Yemen continue their assault on vessels in the Red Sea as a show of solidarity with Palestinian Islamist group Hamas in its conflict with Israel. This has forced major shipping firms to opt for the lengthier and more expensive route around Africa's Cape of Good Hope instead of the Suez Canal. This brings a significant headache for India, a major buyer of Russian crude oil and a key exporter of petroleum products to Europe. The transportation of the above products to their respective destinations necessitates using the Suez Canal. As per a Reuters report, at least four tankers carrying diesel and jet fuel from West Asia and India to Europe have rerouted around Africa to sidestep the Red Sea. Together they transported 2.4 million barrels of diesel and jet fuel.

India's significance in exporting petroleum products grows with time. Data from Kpler, a data analytics firm, revealed that India was Europe's top supplier of refined fuels in May last year. Over the recent and past financial years, India’s refined fuels have largely been imported by the Netherlands. Between FY23 and FY24 (April - October), the Netherlands purchased roughly $19,300 million worth of refined fuel from India. Such oil shipments destined for Europe pass through the Suez Canal.

Another cause for alarm for India is the substantial quantity of crude oil it imports from Russia. During FY24 (April - October), over $26,900 million worth of crude oil was imported from Russia, which tops India's oil sources this year — Iraq being a distant second ($15,582 million). The majority of this oil arrives in India via the Suez Canal. The ongoing tensions in the Red Sea may, therefore, have a significant impact on India’s import of crude oil from Russia and on its exports of petroleum products.

Indian refiners are reportedly searching for increased supplies from West Asia to avert potentially rising import costs due to the risks associated with shipping oil through the Suez Canal. With retail fuel prices in India reaching an all-time high and the general elections looming, the consequences of this situation remain uncertain.