Adverse developments in West Asia, US, Russia: India may be worst-hit

India may be the worst-affected country in Asia due to adverse developments in West Asia, the US and Russia over the last few days.

 

The simultaneous impact affects a potential 3.5 million barrels per day (b/d) in crude oil supplies or over 65 per cent of India’s crude imports, according to ship-tracking data and senior industry sources.

 

Since the US-Iran ceasefire collapsed on July 8, haemorrhaging maritime traffic via the Strait of Hormuz, the US Congress has introduced legislation targeting exports of Russian oil.

 

Ukraine has stepped up attacks on Russian refineries and loading terminals and the Iran-backed Houthi rebels announced plans on Monday to block the Red Sea route for tankers departing from Saudi Arabia.

 

“Saudi Arabia's main Hormuz bypass is now exposed,’’ said Emmanuel Belostrino, head of global crude and geopolitical market data, for maritime intelligence agency Kpler. 

 

“The Red Sea route that supported Riyadh's conflict response is facing its own security constraint, potentially reducing the resilience of Saudi crude exports.’’

 

Washington is preparing to pass sweeping Russian sanctions and punitive tariffs legislation. The US Senate has 62 cosponsors in the 100-seat chamber for The Lindsey O. Graham Sanctioning Russia Act of 2026, sufficient to get it passed in the coming days, although getting it through the US House of Representatives could be a tougher task, according to UK trade newsletter Energy Intelligence. 

 

The legislation allows US President Donald Trump to impose tariffs of as much as 100 per cent on the top-five purchasers of Russian oil and natural gas, essentially targeting China and India. “We anticipate it could pass as early as this week, and nothing would honour Lindsey's legacy more than Congress passing this sanctions Bill," Rep. Michael McCaul told Fox News on Sunday. 

 

Separately, on July 20, Iran-backed Houthi rebels announced a sea navigation ban on Saudi Arabia, potentially affecting exports of over 5 million b/d of crude oil from its export terminal on the west coast.

 

This is an alternative route Saudi Aramco uses to ship its crude after Iran closed the Strait of Hormuz, a primary waterway for oil and LNG supplies. 

 

Saudi Arabia and other West Asian producers used Hormuz to supply a fifth of the world’s oil and LNG supplies.

 

After Hormuz closed, once in March and now in early July, Saudi Arabia has used the Yanbu and Muajiz terminals, to send oil via the Bab al-Mandeb strait. This is a passageway on the Red Sea that is even narrower than Hormuz. 

 

Russia uses the same passageway to ship crude oil to India, according to ship-tracking data.

 

The extent of the Houthi threat is unclear. The Iran-backed rebels, occupying parts of Yemen, are yet to attack any vessel, but a senior Indian refining official and a Dubai-based trader said that ship owners are hesitating to send vessels to the area.

 

No vessels, except Russian oil tankers, have crossed the Mandeb since the Houthi threats on Monday.

 

On Tuesday, two laden crude tankers, Xin Long Yang and the India-bound MRPL refinery chartered Rodos, reversed course in the Red Sea after departing Saudi Arabia, according to MarineTraffic.

 

Kpler data showed 12 vessels laden with crude from Yanbu currently operating in the Red Sea, while 2 others have switched off their AIS trackers near al-Mandeb, a sign of concern, an industry official said.

 

On the inbound side, 11 ballast (empty) vessels destined to load crude at Yanbu are already inside the Red Sea and at least 5 more have yet to cross al-Mandeb, Kpler data showed.

 

India’s impact

 

During their previous Red Sea campaign in 2023-2025, the Houthis used missiles, drones, and small boats against merchant shipping, sinking four vessels and killing 9 seafarers. This sent commercial traffic through Bab el-Mandeb to a record low. Only Russia with Tehran’s help was allowed to use the waterway to ship oil to India.

 

India has ensured supplies of crude oil until late August and is currently in talks to secure supplies for September from Russia and the Americas, senior refining officials said.

 

The country has faced few shortages of crude and fuels over the 140-day West Asian war, but only at higher costs, they added.

 

But India is still the most exposed among other major consumers, including Japan, South Korea and China.  

 

India bought a record 2.7 million b/d of Russian crude oil in June and 2.6 million b/d in the first three weeks of July, Kpler data showed. This is over half of India’s overall imports.

 

Shipments from West Asia are lower, but Saudi Arabia, the United Arab Emirates (UAE) and Oman still supplied a sizeable 1.3 million b/d in June, over a quarter of India’s overall crude oil imports. That is a combined 3.8 million b/d in crude imports that passed through Hormuz and Mandeb.

 

Two Indian refining officials said that while they will lose access to Saudi crude, they expect the Houthis to let Russian oil tankers to pass through. 

 

This month, India imported 552,000 b/d of largely premium, light grades from Saudi Arabia, or 11 per cent of its total crude imports; Saudi oil accounted for only 5 per cent in June.

 

Saudi oil can be replaced by US and West African grades, but at a premium to benchmark Brent, a refining official said.

 

The case for Russian oil is trickier — because Russia’s medium, sour Urals grade, well suited to Indian facilities, can only be replaced by West Asian varieties, which have virtually ceased, the official said, expressing concerns over the Graham legislation.

 

China can use its leverage over rare earth mineral exports to tame Trump but India has no levers, the official said.

 

“Tension, violence, and hostilities continued to ramp up over the past week, triggering the largest weekly gain on Brent futures since late April,” said James Noel Beswick, head of commodities at London-based Sparta Commodities.

 

Brent crude touched $85 per barrel (bbl), lower than the $120/bbl levels seen in March but much higher than the $70/bbl levels in early July.

 

This came after the 60-day ceasefire between Iran and the US fizzled out in a fortnight, resuming hostilities from July 10.