India to Cut Oil Exports, Seek New Crude Suppliers Outside the Gulf as Strait of Hormuz Tensions Intensify
As the Israel-Iran war intensifies, India is getting ready to get crude oil from sources outside the Persian Gulf and cut back on its exports of petroleum products due to worries about possible blockage of the Strait of Hormuz.
As a possible closure of the Strait of Hormuz looms, India intends to reduce its exports of refined products and get crude oil from sources outside the Persian Gulf, Oil Minister Hardeep Puri announced Thursday.
The narrow channel that connects the Gulf to the Indian Ocean is traversed by almost 25% of the world’s oil trade. As Iran’s war with long-time rival Israel intensifies, market observers fear that Iran may attack tankers passing through Hormuz or close the strait completely.
India’s crisis management blueprint
“Even in the event of a disruption, we can source it from alternative suppliers because we have diverse supplies of crude,” Puri told NDTV.
He went on to say, “I don’t think we are overly concerned about this.” Since there is an abundance of crude on the world market, price rather than supply is the issue.
Although there is currently no indication that Iran may close the strait, the country has threatened to do so in the past during times of tension. According to Bloomberg, which cited Puri, 1.5 million of the 5.5 million barrels of oil that India uses daily go through the waterway.
Exports of Indian goods
With refiners like Reliance Industries Ltd. and Nayara Energy shipping to nations including the US, Australia, Singapore, and the United Arab Emirates, India is a net exporter of petroleum products. According to the news agency, if necessary, the crisis could lower those exports to keep adequate stocks at home.
This year, India has exported an average of 1.3 million barrels per day, with Reliance and Nayara accounting for 82% of shipments, according to Bloomberg.
Tensions in the Middle East caused oil prices to soar
Brent crude, the global standard, increased 19 cents to $76.89 per barrel, while US benchmark crude oil increased 15 cents to $73.65 per barrel.
As concerns about the Israeli-Iranian confrontation potentially disrupting the world’s petroleum supply have subsided, oil prices have been fluctuating.
The potential involvement of US President Donald Trump in the Iran-Israel dispute is another element contributing to the volatility. Concerns about possible U.S. military engagement and the possibility of a wider regional confrontation are growing as hostilities between the two countries intensify, with both sides increasing their attacks since last Friday.
Iran, which is situated on the narrow Strait of Hormuz, through which a large portion of the world’s crude passes, is a major oil producer.
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