Omani waters are emerging as the critical passage keeping Gulf oil moving to global buyers, including India, with more than 80% of outbound flows either using the Omani side or moving with tracking systems switched off. Increasing traffic through the alternative channel comes at an opportune time for India, as a supply squeeze of Russian urals over recent weeks have inflated the cost of the country’s crude imports. The Indian crude basket averaged $88.62 a barrel in August so far, up from $82.04 in July and $83.22 in June.
According to sources in trade circles, insurers, however, no longer consider the Oman corridor a safe alternative amid continued attacks. “More than 80% of outbound flows are either transiting through Omani waters or sailing dark,” Kpler said, adding the latter are also likely using the Omani route.
Tankers continue to get through despite persistent security risks, challenging claims of a complete shutdown of the Strait of Hormuz. But the route’s growing importance has not translated into lower risk premiums. “Insurers now treat the Omani corridor, designed as the safe lane, as part of the target set,” Kpler said. War-risk cover for a single Hormuz voyage has been quoted at $5-14 million, while spot VLCC (very large crude carrier) rates on Asia routes remain near historic highs.
The divergence is significant: Omani waters are increasingly important for physically moving Gulf barrels, but shipowners and insurers still do not have a dependable low-risk corridor. This assumes greater importance for India as refiners again look towards traditional West Asian suppliers at a time when Russian crude availability has eased sharply from July’s peak.
Russian crude supplies to India averaged around 1.9 million barrels per day (mbpd) in the first half of August, down nearly 32% from 2.8 mbpd in July. UAE crude deliveries, meanwhile, stood at around 700,000 bpd and Saudi Arabia at about 480,000 bpd during the first half of August. The numbers underline the growing relevance of Gulf supply routes as refiners rebalance purchases amid lower Russian flows.
Latest vessel movements, however, underline the volatility. Ship tracker MarineTraffic data showed Hormuz crossings at just three on August 16, rising to 12 on August 17 before easing to 10 on August 18. By comparison, Bab-el-Mandeb recorded 45, 30 and 46 crossings on the respective days.
Kpler describes Hormuz as “neither fully open nor fully closed.” Outbound non-Iranian oil flows had collapsed below 300,000 bpd during the war before recovering above 5 mbpd, but continued attacks and intermittent stoppages have prevented a return to stable pre-war shipping patterns.
The share of sour crude, represented by Oman and Dubai grades, increased to 25.06% in August from 20.60% in July, while the sweet crude share declined to 74.94% from 79.40%. Greater availability of Gulf barrels through Omani waters could, therefore, provide Indian refiners additional sourcing flexibility as Russian flows moderate.
That flexibility, however, is coming alongside higher acquisition costs. Brent rose further to $91.81 a barrel on August 19, up 0.87% from the previous day. The benchmark has gained 2.90% over the past month and 37.36% from a year earlier.
Gulf producers are simultaneously trying to reduce dependence on Hormuz. Saudi Arabia is making heavier use of its East-West pipeline towards Yanbu, while the UAE continues exports through Fujairah. Kpler estimates the two routes are rerouting around 4 mbpd. Persian Gulf liquids reaching global markets are currently around 9-10 mbpd, including 7.5 mbpd of crude, still well below the 15.8 mbpd seen before the war.
The broader supply cushion also remains thin. Kpler estimates that crude movement during the 60-day US-Iran peace agreement window averaged 6.1 mbpd against the roughly 15 mbpd Hormuz handled in 2025, leaving a shortfall of around 550 million barrels. Indian crude inventories were near 100 million barrels, with the report warning that without restored Gulf flows, feedstock could tighten again in the fourth quarter.
For India, the emerging equation is, therefore, increasingly tied to how much Gulf crude can keep moving through Omani waters and at what insurance and freight cost, as refiners seek to preserve supply flexibility amid lower Russian availability and a renewed tilt towards Middle Eastern barrels.