India Weighs Export Cuts Amid Hormuz Blockade Threat

Key Highlights

• Stable Domestic Prices: Bitumen, base oil, fuel oil, and lubricants hold steady across key Indian hubs.
• Hormuz Risk Looms: 1.5 million bpd of India’s crude passes through the Strait of Hormuz; any disruption could impact supply chains.
• India’s Preparedness: Strategic reserves, diversified sourcing, and potential export curbs aim to safeguard domestic supply.
• Global Market Caution: Volatility persists, but analysts believe prices may not breach $80/bbl due to OPEC capacity and US shale resilience.

Petroleum Product Price Trends Across Indian Markets

1. Roadgrip Bitumen (VG40) in bulk is available in Karwar at ₹37,590 per metric ton. Refinery Bitumen (VG30) in bulk is priced at ₹47,722 per metric ton in Mathura.
2. Roadgrip Bitumen Emulsion RS-1 in bulk is priced at ₹32,990 per metric ton, and SS-1 in drum packaging is ₹34,090 per metric ton, both in Pithampur. 
3. Base Oil SN150 in barrels is being sold in Delhi at ₹68 per kg, while the same grade in bulk is available in Kandla at ₹63 per litre. 
4. Low Sulphur Heavy Stock (LSHS) Fuel Oil in bulk is priced at ₹50.75 per kg in Jamnagar, and 180cST Furnace Oil in bulk is at ₹50.5 per kg in Mumbai. 
5. Sephan Rubber Process Oil (Aromatic) in barrels is ₹46 per kg, and PARS Rubber Process Oil (Aromatic) in bulk is ₹44.5 per kg, both in Mundra.
6. In Bhiwadi, LubriEdge Hydraulic Oil 68 is priced at ₹91 per litre in buckets and ₹87 per litre in barrels. 
7. LubriEdge Gear Oil 150 in barrels is priced at ₹115 per litre. LubriEdge Rust Preventive Oil (Water Displacing WDM) in barrels is ₹122 per litre. 
8. LubriEdge Metal Working Fluid (Soluble Cutting Oil) is priced at ₹112 per litre for both bucket and barrel variants.

Potential Export Curtailment by Private Refiners

• India is actively preparing for potential disruptions in crude oil flows due to rising geopolitical tensions in the Middle East, particularly concerns surrounding the possible blockade of the Strait of Hormuz—a crucial maritime chokepoint for global oil trade. Roughly 1.5 million barrels per day of India’s total 5.5 million barrels/day consumption currently transit through this route
• To ensure uninterrupted supply, Oil Minister Hardeep Singh Puri confirmed that India has adequate strategic reserves and diversified sourcing arrangements in place. The government is also contemplating cutting exports of refined petroleum products—primarily diesel, petrol, and jet fuel—should domestic stockpiles come under pressure.
• Currently, India is a net exporter of petroleum products, with private refiners such as Reliance Industries and Nayara Energy leading the charge, accounting for over 82% of the 1.3 million b/d in product exports. In the event of a full or partial blockade, these exports may be curtailed to prioritize domestic energy security.
• Despite no confirmed action from Iran yet to close the strait, the possibility of military escalation continues to fuel uncertainty and is triggering shifts in procurement strategy across Indian refineries and global trading houses.

Market News: Global Oil Price Outlook Amid Middle East Tensions

• Amid the escalating Iran-Israel conflict, concerns are rising over the global crude oil market, with Union Minister Hardeep Puri emphasizing India's strategic preparedness to handle any disruptions. 
• India, which is projected to see an increase in oil demand by 1 million barrels per day between 2024 and 2030, is preparing to source crude from outside the Persian Gulf and may halt petroleum product exports if the Strait of Hormuz is blocked. 
• The Strait is a key trade route through which 1.5 million barrels of oil consumed daily in India pass. Analysts warn that if crude oil prices rise significantly beyond current levels, it could impact India’s GDP growth estimates. 
• While global markets remain volatile, Indian stock markets have remained relatively calm so far. However, India and neighboring countries like Pakistan are bracing for potential oil price surges and supply disruptions. 
• There is a consensus among brokerages that crude may not sustain levels above $80 per barrel due to OPEC's spare capacity, steady US shale output, and overall market resilience. 
• India’s refiners like Reliance and Nayara, which contribute significantly to petroleum exports, may reduce shipments to ensure adequate domestic availability in case of severe disruption.

Market Expectation and Expected Near-Term Volatility

While crude availability in the global market remains stable, the key concern is pricing volatility driven by geopolitical risks. Market participants expect short-term price spikes and potential logistical rerouting, which could impact freight rates and refinery margins. However, India’s proactive stance and strategic reserves may cushion any immediate supply shocks, though export curbs could tighten availability in international product markets.