Red Sea route disruptions may hit Saudi and Russian crude supply to India

Red Sea tensions escalate

The Red Sea, a critical chokepoint for global oil shipments, is once again in the crosshairs of conflict. The Houthis have threatened to attack oil tankers if they use Saudi Arabian ports along the Red Sea. This warning comes amid heightened tensions in the region and could have severe consequences for crude supply routes.

For India, the world’s third-largest oil importer, the timing could not be worse. Indian refineries depend heavily on crude from both Saudi Arabia and Russia. Any disruption to Red Sea shipping lanes would hit these supplies directly.

Impact on Saudi and Russian crude

Saudi Arabia exports a significant portion of its crude through Red Sea ports, including Yanbu and Rabigh. If tankers avoid these ports, Asian refiners — including Indian ones — may need to reroute shipments via the Suez Canal or seek alternative sources. That could push up freight costs and delivery times.

Similarly, Russian crude shipments to India, which have surged since the Ukraine war, often transit through the Red Sea. A blockade or heightened insurance premiums would make these cargoes more expensive. The combined effect could squeeze India's refining margins and stoke domestic fuel prices.

Asian refiners scramble for alternatives

According to Reuters, Asian refiners are already looking at the Suez Canal as a backup route for Saudi oil. But the canal itself is not immune to delays. Congestion and higher transit fees could add to costs.

The Houthi threats also highlight the limits of Saudi strategic patience. Al Jazeera has noted that the Houthis may soon discover how far Riyadh is willing to tolerate such provocations. Meanwhile, Pakistan finds itself in a dilemma — caught between Iran and Saudi Arabia — as reported by ThePrint.

What this means for India

India imports over 80% of its crude oil needs. Saudi Arabia and Russia together account for nearly a third of that. Even a temporary disruption could force New Delhi to dip into strategic reserves or seek spot cargoes from other regions.

Officials have not yet confirmed any immediate impact on supply. But industry watchers are wary. The Red Sea route is not just about oil — it affects LNG, fertilizers, and other commodities critical for the Indian economy.

Another oil shock, if it materialises, would complicate India's inflation fight and fiscal planning. The government has already taken steps to cool prices, but external shocks remain a wildcard.

What to watch: The Houthis' next move and whether Saudi Arabia escalates its response. Indian refiners will also be closely monitoring freight rates and insurance costs for Red Sea transits. Any sustained disruption could force a shift in procurement strategy — and that would ripple across global oil markets.