India's Fuel Shock: War Disrupts 45% of Oil Imports

India's fuel supply is under strain due to the ongoing conflict in West Asia, which has disrupted nearly half of its oil imports. The primary concern extends beyond mere volume replacement to the critical aspect of crude oil quality. Indian refineries are configured to process Gulf crude for optimal diesel output, a fuel crucial for transport and industry, accounting for about 40% of consumption.

Alternative crude sources, such as US or African grades, often yield less diesel and more petrol or have higher sulphur content, complicating refining. Russian Urals crude has emerged as a compatible substitute, offering better diesel yields. However, even with volume replacements, a persistent quality mismatch could still limit diesel production, posing a risk of tighter supply.