New Delhi: Saudi Aramco has stopped term crude oil sales to Indian refiners “until further notice”, adding to the pressure on buyers already facing high oil prices, costly shipping and disruptions in the Gulf.
The pause comes as crude flows from the Gulf face fresh trouble. Saudi Arabia’s East–West pipeline has been shut after an attack, limiting the kingdom’s ability to send oil to its western ports, while the Strait of Hormuz remains disrupted, leaving fewer options for exporters and buyers, as reported by News18 citing a report by The Economic Times.
Saudi crude has been a key part of India’s imports. Since the conflict began, Aramco has supplied about 9% of India’s crude imports, making the suspension a significant development for refiners that depend heavily on overseas oil, the report said.
For Indian refiners, the main worry is not just finding replacement barrels but the higher cost of those barrels.
Brent crude rose to around $108 a barrel on Wednesday and was still trading above $105, keeping prices near recent highs, ET reported.
Higher Costs For Crude, Freight
Refiners can look to other producers, but replacing Saudi oil is likely to be more expensive as global prices and spot rates stay elevated, the report said.
ET said refiners are also facing higher tanker freight charges, adding to the cost of each cargo. At the same time, discounts on Russian crude have narrowed or disappeared, making it a less attractive option on price.
This means buyers may have to source oil from more suppliers and regions, which could raise their overall purchase costs, the ET report said.
Some Saudi Oil Still Reaching India
The suspension does not mean Saudi crude has vanished from the market. According to ET, Aramco has continued to sell some cargoes in the spot market to traders, and some of these barrels could still reach Indian refiners via the Strait of Hormuz.
However, such spot purchases may not offer the same certainty or price advantage as regular term contracts, the report said.
Impact On Refiners, Import Bill
The timing is difficult for India’s refiners, which need steady imported crude to run their plants and meet domestic fuel demand. If crude costs rise faster than fuel prices, refining margins could come under pressure, ET reported.
Refiners are expected to adjust their crude mix, look for alternative suppliers and use more spot cargoes, the report said.
The final impact will depend on how long the Saudi supply break lasts and how quickly normal flows through key Gulf routes resume, ET said.
If the disruption continues, India’s overall oil import bill could rise as refiners are forced to buy costlier replacement barrels, the report said.