India's crude buying swung back to the Gulf in September, and the timing is awkward. Middle East crude rose to about 2.8 million barrels a day, the highest since February, and about 54% of India's imports against 32% in August1, 2. On the morning the data was reported, Iran's Revolutionary Guards said seven vessels had been hit or mined in the Persian Gulf in 24 hours6.
The September splits come from ship-tracking data reported by Mint and the Economic Times1, 2. PPAC, the oil ministry's data arm, publishes detailed tables in its monthly ready reckoner, but its public import page asks users to register first7, 8. PPAC data do confirm the volume: 21.7 million tonnes of crude in September, up 6.8% from a year earlier9.
Why the barrels went back to the Gulf
The premium Indian refiners pay for Russian crude over Brent fell to $1-$2 a barrel from more than $10 in recent months, a refining source told Mint and ET1, 2. Landed Russian crude now costs about the same as some Iraqi grades1.
Iraqi supply shows the swing. Imports of Iraqi crude jumped to about 830,000 barrels a day from 171,000 in August1, 2. Russia is still India's largest supplier, ahead of the UAE and Iraq, but its share fell to 33.5% from 46.6%1, 2. Russian volumes fell about 14% to about 1.8 million barrels a day, and total imports rose 20% to about 5.33 million barrels a day1.
Gulf cargoes also reach Indian ports faster, and some producers cut selling prices to offset high freight1. "We will buy from whoever offers us better prices," the refining source said1, 2.
The freight bill is the catch
The Gulf is closer, but it is not cheaper to reach. The IEA puts the cost of shipping crude from the Middle East Gulf to Asia at more than $37 a barrel by mid-October, over five times pre-war levels3. For a VLCC, the standard 2-million-barrel tanker, that is more than $74 million a cargo against less than $15 million before the conflict3.
The cost reflects a more complex route: shuttles through Hormuz and ship-to-ship transfers outside the strait, on top of direct sailings3, 10. The IEA does not give a separate figure for war-risk insurance3.
Some producers sell on a delivered basis and absorb part of the freight, and Iraqi crude has been sold at a discount to Dubai on a free-on-board basis, a source told ET11.
Then there is the rupee. It traded at 94.47 to the dollar on 21 October, down 7.4% from a year earlier12. PPAC data put the April to September import bill at $90.6 billion, up 46.3% on almost flat volumes of 122.7 million tonnes9. September alone cost $15.4 billion, up 46.6%9.
The Indian basket averaged $121.25 a barrel in October against $65.08 a year earlier9. Every $1 a barrel rise can add up to $2 billion a year to the import bill, according to the report9.
A claim, and what is confirmed
The IRGC said its navy tracked four vessels that used a route Tehran considers unauthorised, then struck them as they transferred oil in the north-central Gulf, and that all four were burning6. It said three more vessels hit mines west of Hormuz6, 13. Iran gave no vessel names, flags, casualty figures or independently verifiable evidence6.
The US military has disputed earlier Iranian mine claims, saying the shipping lanes have been cleared and that missiles and drones caused the damage6. UKMTO's latest warnings describe a tanker hit by a projectile 11 nautical miles west of Bukha in Oman, and another struck 30 nautical miles southeast of Iraq's Al Faw6. Neither report names the vessel6. The IMO's tally is 119 confirmed incidents and 24 seafarer deaths since hostilities began6.
Flows have held up better than the attack count suggests. Kpler put Gulf crude and condensate flows at a high of 24.6 million barrels a day in the week to 18 October10. Vortexa's estimate for the same week was 18 million barrels a day10. Both put pre-war flows at 18.5 million barrels a day or more, and both show October to date below that10. Morgan Stanley analysts wrote that attacks had "increased sharply in recent weeks" while flow through the strait "has remained relatively resilient"10.
Damage is getting worse. At least 23 ships were attacked in the first two weeks of October, at least five with engine-room hits, and at least two vessels sank last week14. September had no attacks that damaged engines14.
What buyers are paying today
Oxford Economics said a November increase of around half the 7.5% cumulative rise in May was possible15. It says May was the only period retail pump prices rose in response to the war, and forecasts inflation of 6.2% in October to December if a rise comes. The RBI has projected 6%15.
Aviation fuel has moved faster. Domestic ATF prices rose ₹16 a litre from 1 October to around ₹137, and were 46.2% higher than a year earlier16. Air India and Air India Express added fuel surcharges of up to ₹1,200 on domestic flights and up to $215 on international routes from 9 October16. Domestic LPG cylinder prices are set monthly by the state refiners, not daily17.
What would flip the trade back
For the trade to reverse, Russian crude would need to be cheaper than Iraqi grades again, or Gulf freight would need to fall1. The premium for Russian crude over Brent is now $1-$2 a barrel, and its landed cost is about level with some Iraqi grades1, 2.
Washington waived the new Russia-related tariffs under the Graham Act, due to take effect on 18 October, and can apply them later18. The law also allows duties of up to 100% on goods from countries that buy Russian oil and gas18.
IOC planned to take about 47% of its crude from Middle Eastern producers under annual deals in the year to March 202711. It will slightly cut those volumes next year, a source said, and refiners have shifted to spot purchases11.
What to watch
Weekly VLCC rates from the Gulf to India, and the war-risk quotes behind them, are the first signal. PPAC's basket price and the rupee are the second. If freight falls while the Russian premium stays at $1-$2, the Gulf share should hold. If freight rises again, the September shift will look like a one-quarter trade.