The tension in the Middle East is at its peak and the Israel-Iran war is constantly deepening. Meanwhile, on Saturday, the US attack on Iran’s nuclear bases gave further air to the war. After this, Iran not only intensified the attack on Israel, but the Iranian Parliament in a hurry approved the proposal to shut down the hormuz Strait. About 20 percent of the worldwide crude oil is traded through this oil route.
The list of buyer countries includes India, China, Japan as well as India. Although the government is denying that the obstruction of this route will greatly affect India’s crude oil imports, but according to ICRA data, India does the highest imports after China, Japan and Korea through SOH. Let us understand what kind of difficulties can arise for India due to the closure of this oil route and what is the government’s preparation to deal with it? According to research firm Ikra, 20 % of the world’s oil trade is through hormuz. The special thing is that more than 80 percent of this oil exports to the world through SOH are imported into Asia, with 65 percent of crude oil reaches China, India, Japan and South Korea.
In the ICRA report of the ICRA report of the import of crude oil imports from China to India, we look at the data of crude oil exports to all countries in 2024, 26 per cent to China, 22 per cent to Japan-Corea, 22 per cent to India, 14 per cent to European countries, 8 per cent to European countries and 5 per cent to Africa 5 per cent to Africa. At the same time, the remaining Asia imported 22 percent. Meaning, India got the most oil after China and Japan-Korea. According to the report of the research firm, crude oil imports from Iraq, Saudi Arabia, Kuwait and UAE via Hormuz are about 45–50 percent of India’s total crude oil imports.
It is not easy for Iran to stop closing Hormuz, even though there have been many big threats, Iran has never stopped Hormuz Strait. One of the major reasons for this is that Iran’s economy is dependent on oil and any such decision can not only create difficulties for the world, but can also prove dangerous for Iran’s economy. However, on the other hand, crude oil prices have risen a sharp rise amid Iran’s threat to shut down Hormuz and it reached $ 80 per barrel on Monday. Advertisement
Relief to India even in crisis, despite the threats to increase war in Israel-Iran and to shut down the hormuz and the rise in crude oil prices, it is seen in a safe zone if we talk about India. We are not saying this, but the Union Petroleum Minister has said amid speculation to shut down the hormuj strait. Our oil supply remains continuously diversity and most of the supply to the country is not a way of hormuz, so it will not have much impact on India. Hardeep Singh Puri assured in his post that we have been keeping a close watch on the changing geopolitical situation in the Middle East for the last two weeks. In case of any disruption, we will take all the necessary steps to ensure stability of fuel supply to our citizens.
The import of crude oil from Russia and the US increased, yes, while other countries, including China, are sweating in fear of the closure of Hormuz, India is increasing its oil imports from Russia-America. In June, crude oil imports from Russia reached a two -year highest level. According to data released by the global trade analyst firm Kepler, the amount of oil coming into India from these two countries in June was higher than the total purchase of traditional Middle East suppliers. India is importing 2–2.2 million barrels of Russian crude oil per day, while imports from the US increased to 439,000 BPD per day in June, which was 280,000 BPD in May last month.
Significantly, India is the third largest oil importer and consumer country in the world. It imports about 90 per cent of its needs and more than 40 per cent of it is imported from Middle Eastern countries, which is exported via Hormuz Strait. According to reports, India imports about 5.1 million barrels of crude oil from abroad, which is converted into fuel like petrol and diesel in refineries.
The closure of Soh will affect such a bad effect! Even though the government is refusing to have any major impact on India due to the closure of Hormuz Strait, but despite this, the decrease in the amount of crude oil coming to India and the increase in crude oil prices may increase the risk of inflation in the country. After the commencement of the Israeli-Iran war, the price of crude oil has been estimated to reach $ 120–130 per barrel in several reports. In such a situation, there is a possibility of jump in crude oil prices. The operational costs of shipping companies will increase, the ships will have to change the path due to the closure of Hormuz Strait, ie Soh and adopt a longer and expensive path. This will also increase the cost of freight and delivery time. Increase in prices will increase the cost of transport in the country and the prices of essential things can increase. That is, it can prove to be inflation enhancing.
