Iran-Israel Conflict: How did India kill from blocking the Straight of Hormuz? Indian refiner looks alternative routes for fuel supply
Will the Iran-Israel struggle increase the issue of oil supply for India? According to oil industry officials, amidst increasing tension with Israel, Indian refiners are searching for alternative energy sources to block the Strait of Iran.After the Iran-Israel tension explosion on Friday, senior oil ministry officials and industry leaders are performing landscape analysis and preparing a contingent plan for potential supply disruption and value volatility.The Ministry of Oil reports that India maintains crude oil and petroleum product storage facilities that are capable of meeting 74 days’ domestic consumption requirements. Strategic petroleum is reserved for 9.5 days of this total capacity. Unlike its strategic raw reserves, India has not established gas storage facilities. Additionally, the government maintains secrecy about national oil and gas inventory levels.Industry officials indicate that this overall storage capacity includes refineries, pipeline networks, transparents, product storage terminals, and empty tanks suitable for storage of both crude oil and sophisticated products.
What is the strainer of hormuz and why it matters
- The Strait of Hormuz serves as an important channel for energy transport worldwide. This strategic waterway spreads just 29 miles in its most hesitant section, facilitating about one-third of sea oil shipments and 20% of global liquefied natural gas.
- The strategic significance of this route, which connects the Persian Gulf to the Gulf of Oman and Arabian Sea, is emphasized by the US Energy Information Administration (EIA), nominated as the “world’s most important oil chokepoint”.
- The International Energy Agency (IEA) reports that in 2023, about 20 million barrels of crude oil (MB/D) and sophisticated products detected the strainer of the hormuz, for about 30% of global oil commerce.
- Most of this volume – about 70% – is in luck for the Asian markets, the primary sites with China, India and Japan.
- Although alternative pipeline networks exist, their capacity is restricted.
- According to IEA calculations, only 4.2 MB/D of crude oil can be redirected through land-based routes, including Saudi Arabia’s pre-west pipeline in the Red Sea and UAE’s Abu Dhabi crude oil pipeline to Fujirah. This available capacity is about one-fourth of the regular daily volume passing through the straight.
Impact on India
A possible closure of the Straight of Hormuz may affect 40% of India’s raw imports and 54% of its LNG supply. This straight currently provides about 30% global oil trade and 20% LNG shipment.India’s crude oil dependence on imports is 90%, in which refineries are highly dependent on the supply of bay. Russian imports form around 35%, the Gulf nations contribute more than 40%, while Africa, the US and other sources form balance. African imports declined by 5% in April 12% in April.Also read Important dental? How a growing Iran -Israel struggle can endanger India’s development story – explainedFor 2024, India’s LNG procurement from the Gulf region is 54%, with Qatar 80% and the United Arab Emirates, supplies the remaining amount. The top three global LNG maintains a significant impact on the ranking, Qatar, worldwide gas supply among the exporters. Any obstruction in Katri exports can trigger an increase in LNG prices. Additionally, long -term LNG prices may increase, 60% of India’s long -term agreements are associated with crude oil rates.However, Indian refinement and industry industry officials express doubts about implementing a blockade about Iran, based on historical examples. They suggest that such action would probably trigger a sufficient price increase and direct American intervention, while Gulf nations and oil-dependent countries will also have adverse effects. Additionally, officials noted that blocking the straight would interrupt both the Gulf export and the necessary imports, including its own trade, which serves as an important preventive. Currently, Indian refiners are maintaining their normal purchasing patterns without resorting to ‘buying panic’.Also read Iran-Israeli Conflict Effect: Basmati rice prices are expected to drop Indian Basmati, the third largest buyer of Indian Basmati, to demolish Iran.While accidental plans exist, an executive told ET that “Strait closure will shrink the global pool of oil and gas. No matter how carefully you prepare, each economy will feel the lack of supply and the effect of the price spike.” Another executive highlighted the intensity of the situation, “If India turns into West Africa for additional supply, other importers are likely to follow.”International LNG trade leads to lack of maturity and flexibility seen in oil markets, with some options for supply diversification. The 2022 energy crisis highlighted this vulnerability when a former Gazprom subsidiary missed its LNG delivery commitments to India, forced the company to reduce supply to domestic consumers.
