Oil up 37% in 2026: Will India return to Russian oil amid Strait of Hormuz disruptions?

The ongoing West Asia crisis has sent oil prices soaring, pushing Brent crude close to the $83-a-barrel mark within a few days. The sharp rise, as Iran targets oil infrastructure in Gulf states in retaliation for joint United States and Israel strikes, has raised fears that crude futures could soon touch the $100-a-barrel mark. 

Analysts noted that at least three crude tankers have been damaged, and Maersk, one of the largest shipping firms, has suspended all cargo via the Strait of Hormuz. Several insurers have sharply raised premiums or stopped insuring cargoes passing the strait, as crude oil added to its year-to-date rise to 37 per cent over $60 a barrel on December 31, 2025. They see a possibility of India returning to Russian oil as part of efforts to diversify its crude supply sources.

Taimur Baig, Chief Economist at DBS Bank said Iranian Navy’s warships may not be able to do much but the ability to drop mines along the waters of the Straits, using small subs or fast boats, is considerable, and very difficult to neutralise.

Even if the US helps oil and LNG tankers navigate through the mines, the pace of shipment would slow significantly. "The implication for energy price, shipment cost, and insurance charge is obvious," he said.

Baig's comments come as the US President Donald Trump suggested that US may begin escorting tankers through the Strait of Hormuz. 

Russian oil?

Indian crude oil basket, which is derived from sour grade (Oman & Dubai average) and sweet grade (Brent dated) of crude oil processed in Indian refineries, stood at $80.16 on Monday. It averaged $62.20 per barrel in December.  India, which derives the majority of its crude supplies from imports, may look to diversify its crude basket, Nomura said. 

It noted that India’s commercial crude stocks at 100 million barrels and strategic reserves at 39 million barrels, combined are roughly 30 days of its crude consumption, and 60 days of crude supplies from the Middle East. 
Refineries, it noted, may also hold a few days of refined product inventories to add to the cushion.

The foreign brokerage said large scale damage to oil and gas assets could lead to oil surpassing $100 a barrel, Nomura warned in a fresh note.

"We believe India may return to securing Russian oil via the Eastern routes, and increase sourcing from the US, West Africa, and Latin America to offset potential loss of barrels from the Middle East. However, the freight costs will be higher due to longer shipping routes, and higher dayrates," it said.

Nomura said there are 60-100 million barrels of Russian crude floating in the Arabian Sea, which India can tap into and can be delivered to India’s eastern coast
in three days’ time. Russian supplies via the Eastern route may take 25 days to arrive, it said. 

"Apart from crude, India also faces elevated risk of LPG and LNG as almost 100 per cent of India’s imported LPG is derived from the Strait of Hormuz and almost 50 per cent of India’s LNG imports flow through this narrow strip," Nomura said.

The brokerage meanwhile noted that OPEC+ cartel on March 1 decided to increase production by 206kbpd as it resumes the phased unwinding of 1.65 mbpd of additional voluntary adjustments introduced in 2023. 

"This adjustment will be implemented in April. Hence, this may not provide any relief from potential supply shocks, but could increase oil surplus later during the year when geopolitical risks abate and normalcy returns," Nomura said.