Middle East Gains Crude Market Share Amid Shifting Supply Dynamics

Key Highlights

• Crude Prices Rise Amid Volatility – WTI, Brent, and Murban crude prices saw steady gains, while natural gas surged by 3.51%. 
• India’s Oil Imports Shift Towards the Middle East – Imports from the Middle East hit a 27-month high, rising to 53.89% in January 2025. 
• Expansion & Diversification Efforts – India’s refining capacity is set to grow over the next decade, with efforts to reduce overdependence on specific suppliers, highlighted by PM Modi’s engagement with Guyana.
• Market Outlook: Stability & Geopolitical Risks – Indian refiners will balance geopolitical risks with cost efficiency, with Middle Eastern crude strengthening its share.

Petroleum Price Trends: Steady Gains Amid Volatility

• WTI Crude traded at $71.35 per barrel, marking a gain of $0.35 or 0.49%. Brent Crude saw a similar upward movement, rising by $0.38 to settle at $75.04 per barrel, reflecting a 0.51% increase. 
• Murban Crude also recorded a positive trend, climbing by $0.34 to reach $77.63 per barrel, up 0.44%. Meanwhile, Natural Gas experienced the highest percentage gain, surging by 3.51% or $0.116 to trade at $3.425.
• Crude oil prices remained volatile as supply chain disruptions and geopolitical shifts impacted global trade flows. 
• The increased reliance on Middle Eastern crude contributed to steady pricing, while Russian oil, subject to U.S. sanctions, saw discounts widen to compensate for higher freight costs. These developments could create short-term pricing stability but may lead to further fluctuations depending on the evolving supply situation.

Demand & Supply: India’s Oil Imports at a 27-Month High

• India’s crude oil procurement from the Middle East surged to a 27-month high, with refiners increasing imports from Iraq, Saudi Arabia, UAE, Kuwait, Oman, and Qatar. Vortexa data shows that the Middle East’s share in India’s crude imports rose to 53.89% in January 2025, up from 51% in December 2024. 
• This shift is largely attributed to reduced Russian supplies due to sanctions. However, despite restrictions, Russian crude imports still saw a 7% month-on-month increase as Indian refiners used sanctioned tankers under temporary exemptions. 
• The uncertainty surrounding Russian supplies has prompted Indian refiners to seek alternative sources from the Middle East, West Africa, and North America for March deliveries.
• India’s refined crude demand is projected to peak later than other major economies, driven by a growing population and rising per capita income. According to S&P Global Commodity Insights, refined product demand is expected to reach 5.7 million barrels per day (b/d) by 2026, with increasing EV adoption influencing fuel consumption patterns. Planned refinery expansions will further strengthen production capabilities.
• “Despite India’s demand being nearly one-third of China’s, its rising population and growing income levels will keep the country in focus,” said Abhishek Rajan, South Asia oil research lead at S&P Global Commodity Insights, ahead of India Energy Week 2025. The highly anticipated event is set to take place from February 11-14 at Yashobhoomi, New Delhi.

Industry News: Strategic Shifts & Expansions

• Vortexa’s Head of APAC Analysis, Ivan Mathews, predicts that Russian crude discharges into India may increase in February before potential delays or reductions in March-April due to ongoing sanctions. 
• Meanwhile, India's refining capacity is set to expand over the next 7-10 years, aligning with rising domestic demand and export potential. 
• Efforts to diversify crude imports are intensifying, exemplified by Prime Minister Narendra Modi’s visit to Guyana, signaling India’s intent to reduce overdependence on select suppliers.

Market Outlook: Balancing Risks & Cost Efficiency

• In the medium term, Indian refiners will continue sourcing crude from multiple regions, balancing geopolitical risks with cost efficiency. Russian crude is expected to remain a key supplier, albeit at steeper discounts to accommodate rising freight costs. 
• The increased procurement from the Middle East suggests a stronger foothold in India’s energy mix, but long-term supply diversification remains a strategic priority. Stability in crude pricing will depend on the evolving geopolitical landscape, OPEC+ production decisions, and global demand recovery.