India's Crude Oil Imports from Iraq Crash to Zero as Gulf Tensions, Soaring Tanker Costs Halt Shipments

Iraq, India's largest crude supplier back in 2022, saw its oil shipments to India completely drop to zero in July. State-owned refiners called off scheduled loadings due to acute maritime safety hazards in the Persian Gulf. Indian Oil Corporation (IOC) cancelled plans to lift 20 lakh barrels of crude from Iraq's Basrah terminal on the supertanker Lila Jamnagar, while Mangalore Refinery (MRPL) cancelled loadings on the tanker Desh Gaurav - bringing bilateral crude flows to a complete halt.

The main cause is the military conflict between the US and Iran, which has turned the Strait of Hormuz into a high-risk zone. War-risk insurance premiums surged from $2.5 lakh to $7.5-10 million per voyage, while tanker freight rates jumped 400% - making it economically unviable and physically dangerous to lift Iraqi crude.

To avoid shortages, Indian refiners pivoted to Russian crude, which made up over 50% of total imports in July, alongside emergency purchases from Saudi Arabia, the UAE, Venezuela, and Brazil. Despite maintaining a 10-15 day stock buffer, the total evaporation of Iraqi barrels highlights how vulnerable India is to West Asian transit bottlenecks, given that the country imports over 85% of its crude requirements.