Potential Oil Supply Disruptions for India: Red Sea Route Challenges Impacting Saudi and Russian Crude
India is facing a potential oil supply crisis as tensions escalate in the Middle East. Following a previous shock in March 2026, the country has diversified its crude procurement, primarily relying on Russian oil. However, disruptions in the Strait of Hormuz and threats from the Iran-backed Houthi group to blockade Saudi Arabia’s maritime routes could lead to new supply challenges for India, which imports a significant portion of its crude from the kingdom.
The Houthis’ Threat
The Houthis have announced plans for a maritime blockade on Saudi Arabia, citing the country’s siege of Yemen’s capital. This threat comes as global crude oil prices are still stabilizing after the earlier disruptions in the Strait of Hormuz. While prices have dipped below $100, the potential for renewed supply issues from Saudi Arabia could push them higher again. The Strait of Hormuz, a critical passage for oil shipments, remains largely inactive, and any disruption in the Red Sea could exacerbate the situation.
Saudi Arabia has redirected its crude exports through the Red Sea port of Yanbu since the conflict escalated. Shipments from this port reached a record 4.19 million barrels per day last month, providing some relief to global oil supplies. However, the route is vulnerable to attacks from the Houthis, who have previously targeted commercial vessels in the region.
Importance of the Bab el-Mandeb Strait
The Bab el-Mandeb Strait is a vital maritime route, especially for Saudi Arabia, serving as an alternative to the Strait of Hormuz. With the latter’s closure, Saudi Arabia has increased its reliance on this strait for crude exports, which are crucial for countries like India. The Bab el-Mandeb connects the Indian Ocean to the Suez Canal and has historically facilitated 15% of global seaborne trade.
However, since 2023, the frequency of attacks by the Houthis on commercial shipping in the Red Sea has led to a significant decline in traffic through the Bab el-Mandeb. Many vessels have opted to reroute around Africa to avoid the conflict. Currently, there are no transit fees for ships passing through the Bab el-Mandeb, but proposals for tolls have emerged, mirroring Iran’s suggestions for the Strait of Hormuz.
Implications for India
The potential blockade of Saudi oil exports poses a multifaceted threat to India, which has relied heavily on Saudi crude since the onset of the US-Iran conflict. Experts indicate that while Russian crude will remain a key supply source, any disruption to Saudi supplies will limit India’s procurement options.
Sumit Ritolia, a lead analyst at Kpler, noted that the immediate threat appears focused on Saudi-linked shipping rather than broader disruptions in the Red Sea. Current operations through the Bab el-Mandeb Strait remain unaffected, but increased freight and insurance costs are likely. If the situation escalates, it could impact India’s largest crude import source, leading to longer voyage times and higher costs.
Prashant Vasisht from ICRA emphasized that while alternate routes exist, they would result in increased freight and insurance expenses. A blockade could affect not only Saudi supplies but also Russian imports, which could continue via the Cape of Good Hope, albeit with longer transit times. The Cape of Good Hope serves as a crucial alternative route, especially during geopolitical tensions, but it significantly increases operational costs due to the longer journey.
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