India has enough crude reserves to cover roughly 50 days of import volume, i.e., with 25 days’ worth of crude oil and another 25 days of petroleum products, government sources said. But the import bill could significantly rise due to prolonged disruption in the Gulf. Officials are looking for alternative options to import crude oil, liquefied petroleum gas (LPG) and liquefied natural gas (LNG). Government sources said, there is no plan to increase the petrol and diesel prices as of now. India imports roughly 90 per cent of its crude requirement, out of which 50% is sourced from the Middle East.
Significance of Strait of Hormuz
Operations through Strait of Hormuz are disrupted since February 28 and the oil and gas shipping through the channel has come to a halt. It is the world’s most critical oil transit chokepoint. The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and handles about one-fifth of global petroleum and LNG trade. The closure of the Strait could affect a significant portion of global supply as nearly 15 million barrels of crude pass through it daily.
Impact of Strait of Hormuz dissruption on India
India relies heavily on its crude energy requirements from the Middle East, so any disruption will significantly affect India’s crude supply. The longer the disruption continues, the greater it will impact the prices and supply. The challenge is more serious for LPG and LNG, where India’s dependence on the Strait is higher. India is the world’s third largest oil consumer, making uninterrupted energy flows vital for its economy. India can expand its supply by increasing imports from Russia, the US, West Africa and Latin America.
Air strikes and rising tensions
The US-Israeli forces have broadened their air operations against Iran on Monday. Attacks were carried out in Lebanon by Israel. In retaliation, Iran carried out strikes in Gulf countries and targeted tankers moving through the Strait of Hormuz.
Shipping through the narrow passage has become risky. Many tankers and container ships are avoiding the passage, due to which oil prices rose for the third straight session on Tuesday. Shipping costs for oil and gas also rose sharply.
