By Nikhil Dedha
New Delhi [India], June 23 (ANI): Amid the ongoing conflict in the Middle East and rising crude oil prices, energy experts have said that oil supply through the Strait of Hormuz is unlikely to be immediately affected, though risks remain if tensions escalate further.
Industry experts, in conversations with ANI, stated that the situation in the region remains tense after the recent US action against Iran, but the general hope is that oil supply routes will stay open.
MK Surana, former chairman of Hindustan Petroleum Corporation Limited (HPCL), told ANI, “India has done well to diversify its supply sources in the last few years, and our dependency on Straits of Hormuz and supply from the Middle East is lesser now than what it was earlier. But any disruption in the Straits and Middle East supply will definitely affect crude oil prices globally. Therefore, for India, pricing is a bigger concern than the availability.”
Surana added that immediately, there is unlikely to be any disruption in supply through the Strait of Hormuz. “Post US action on Sunday in Iran, the situation is of an uneasy calm awaiting Iranian response. General understanding and hope is that the supply chain through the Straits of Hormuz will not get blocked in reality and Iran will not precipitate actions that will damage any oil infrastructure in the neighbouring countries,” he said.
However, “Despite a looming threat, till these two situations hold, the crude oil prices are unlikely to go above the USD 80 range, though there may be occasional spikes depending on news flow. But if any of the two situations happens in reality, the crude prices will rise sharply,” noted the ex-HPCL Chairman.
Surana explained that fundamentally, based on supply-demand projections and without the current geopolitical tensions, crude oil prices would be in the range of USD 60 to 65 per barrel.
Prominent energy expert Narendra Taneja echoed similar views. He told ANI, “The Strait of Hormuz has never ever been closed or blocked in history. It will be a major escalation if there is any attempt on the part of Iran to close the Strait. The US would most likely respond militarily and not let Iran block it. Major oil exporters Saudi Arabia, Kuwait, and Iraq would also protest. Big importers like China and India would protest.”
On the impact on India, Taneja stated, “Almost 39 per cent of our oil import tankers pass through the Strait of Hormuz. So, the impact on India would be there, but our biggest worry is the price, not the supply or availability. If Iran is allowed to succeed in blocking the Strait, oil prices may go up to USD 150 per barrel.”
Madan Sabnavis, Chief Economist of Bank of Baroda, said, “A 10 per cent increase may not have much of an impact on the economy where the fundamentals are robust. But if it is over USD 100 for a prolonged period of time, it would mean virtually a 25 per cent increase over the base case assumption and can have a major impact on these variables.”
He added that the impact on GDP will depend mainly on how inflation behaves and how it affects consumption.
Ajay Srivastava of Global Trade and Research Initiative (GTRI) highlighted India’s vulnerability, stating, “India is especially vulnerable to a possible Strait of Hormuz closure. Nearly two-thirds of its crude oil and half of its LNG imports transit this route. Any closure could send oil prices soaring, sharply inflating India’s import bill, worsening inflation, and putting pressure on the country’s fiscal position.”
“The Strait, which carries nearly 25 per cent of global oil shipments and significant LNG volumes, remains open for now. The parliamentary vote is not binding; a final decision rests with Iran’s Supreme National Security Council, which is still deliberating. While no closure has been enacted yet, the risk of disruption looms amid escalating U.S.-Iran tensions,” he noted further.
Meanwhile, Union Petroleum Minister Hardeep Singh Puri, while speaking with ANI, assured that India is prepared for such risks. He said, “We had diversified the sources of supply. Out of the 5.5 million barrels of crude oil that India consumes daily, about 1.5 to 2 million come through the Straits of Hormuz. We import roughly 4 million barrels through other routes.”
Puri added, “Our oil marketing companies have enough stocks. Most of them have stocks up to three weeks. One of them has 25 days’ stock. We can increase the supply of crude through other routes. We are in touch with all possible actors.”
As tensions in the Middle East continue, India and global markets remain watchful, hoping that the vital Strait of Hormuz stays open and uninterrupted to avoid a sharp rise in crude oil prices. (ANI)
Disclaimer: This story is auto-generated from a syndicated feed of ANI; only the image & headline may have been reworked by News Services Division of World News Network Inc Ltd and Palghar News and Pune News and World News
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