India's Oil Drought Might Have Been Much Worse – Chinese Backout Made All the Difference

Key Insights 

1. China's oil imports via seaborne routes declined by an astounding 3.6 mb/d between February and April 2026.
    
2. In the IEA’s Oil Market Report of May 2026. It allowed Atlantic Basin supplies to go to India and other affected countries. 

The Crisis That Saved India's Energy Supply Chain from Imploding

India's shock caused by the West Asia dispute on its oil supplies has been intense. However, one thing that the media largely overlooked.

The dramatic decrease in Chinese purchases from its side prevented a much bigger problem. 

Crude exports from the Atlantic Basin to the severely impacted East of Suez region have gone up by 3.5 mb/d since February, with contributions from the US, Brazil, Canada, Kazakhstan, and Venezuela, among others. 

India became one of the major destinations for the displaced shipments. In the absence of China stepping aside, securing those barrels would be extremely challenging.

According to the Economy Watch 2026 May report released by EY, both the country's current account deficit and inflation rate might experience intense pressures in case prices stay high over an extended period. 

Global average crude oil prices in April 2026 reached $103.9 per barrel, marking the highest reading since July 2022, EY reports. 

Prices going higher at a time when supplies were constrained would have dragged the economy further down the rabbit hole. 

China's decreased imports one more time mitigated the impact despite its unintentional nature.

The Numbers Behind India's Near-Miss

If you see this data carefully then you see story about just how close India came to a more damaging supply crunch.

India diversified the sources of its imported crude from around 20 countries to 40 by March 2026.

As a result of such diversification, India has become capable of importing 70% of its required crude from regions other than the Strait of Hormuz.

The diversification became possible partly due to the availability of barrels of oil, which were not being bought by China anymore. 

Implications for Petrol Prices and Domestic Bills

Indian consumers face some harsh realities in the form of geopolitical situations in front of global players. 

WPI fuel inflation increased during April 2026 due to an increase in the prices of mineral oils, crude petroleum and natural gas as per the Ministry of Commerce & Industry. 

Each barrel that India failed to source via the Gulf region needed replacement by sourcing barrels from further and more expensive regions. 

This adds up at petrol pumps and gas cylinders.

Moreover, Russian crude has become a necessity for India in terms of its energy security during the ongoing Middle Eastern conflict. 

Russia’s Ambassador to India, Denis Alipov, told India’s NDTV news channel that India is buying significantly large quantities of Russian oil and that Moscow wishes to maintain this high-level energy cooperation. 

It is also clear that due to increased sourcing from Russia and redirection of Atlantic barrels.

Indian refineries were operational; something that seemed uncertain during the time when Hormuz Strait was blocked.

Analysts Are Cautioning About the Short-Term Relief

Energy analysts have sounded caution regarding reading too much relief in the present scenario. 

EY’s report noted that economic security has become as critical as economic growth.

Especially in case of import-dependent economies such as India, and that policy makers need to redirect their policies toward stockpiling larger quantities of crude oil, fertilizers, rare earth materials and essential drugs.