After the drone strike on the East-West pipeline late last week, Aramco suspended all crude deliveries to Indian refineries, effective May 28, 2026.
The pipeline had been the kingdom’s main alternative to the Strait of Hormuz, which had already seen reduced traffic after earlier maritime tensions. Aramco’s 9% share of India’s imports has now been cut off.
Traders are scrambling to fill the void by buying discounted Iraqi crude and transshipping it via the Gulf, a practice that typically costs more and pushes spot prices higher. Brent futures rose to $108 a barrel earlier this week.
Indian refiners have access to other suppliers but the new source options come with steeper freight rates; tanker costs are near record levels, adding to rising procurement costs. The Ministry of External Affairs said it will safeguard energy security through diversified sourcing.
Analysts warn a prolonged supply gap could trigger a sharp rise in refinery margins and increase the risk of supply disruptions if conflict with the Houthis escalates. Meanwhile, the US has signed a law allowing up to 100% tariffs on Russian oil, which could affect India’s largest crude supplier.