India’s Oil Imports Unaffected by Israel-Iran Conflict, Experts Say
The ongoing conflict between Israel and Iran is not expected to significantly impact India’s crude oil imports. Experts highlight that India’s oil imports from Iran are minimal, with the country sourcing oil from around 40 nations, including Russia, Iraq, Saudi Arabia, Abu Dhabi, and the USA. This diverse import strategy helps India manage its oil supply needs.
However, the conflict could lead to price volatility in global oil markets. Experts suggest that a sharp rise in crude oil prices above USD 80 per barrel is likely only if the conflict escalates and disrupts key supply routes like the Strait of Hormuz, a crucial passage for global oil shipments.
Expert Opinions
MK Surana, Former Chairman of HPCL, stated, “India’s supplies of crude oil directly from Iran are almost nil. India has adopted a balanced approach in recent international conflicts. Therefore, crude oil supplies may not be an issue, but price volatility will cause momentary spikes and higher monthly average prices. Any increase above USD 80 should be expected only with serious conflict escalation in logistic supply lines like the Strait of Hormuz.”
Narendra Taneja, a leading energy expert, noted, “The real problem will be much higher prices, posing a huge challenge for our economy and policymakers. India imports 88% of its oil requirements, mainly from Russia, Iraq, Saudi Arabia, Abu Dhabi, and the USA. India remains largely an oil-based economy.”
Potential Impact and Mitigation
While India’s oil supply may not be directly affected, there is concern about temporary price spikes and higher monthly average prices due to geopolitical tensions. If Israel attacks Iran’s oil infrastructure, it could lead to further price increases. Iran might retaliate by blocking the Strait of Hormuz, causing major disruptions in global oil supply.
Despite the risk premium on oil prices, weak global demand projections, uncertainty about China’s economic recovery, and potential OPEC+ production adjustments may ease the impact. Resumed oil production in countries like Libya could also provide relief. However, higher crude oil prices will still challenge India’s economy and policymakers.
Doubts Revealed
Israel-Iran Conflict -: This refers to the ongoing tensions and disagreements between the countries of Israel and Iran. These tensions can sometimes lead to conflicts that affect other countries too.
Crude Oil -: Crude oil is a natural, unrefined petroleum product. It is used to make fuels like petrol and diesel, which are important for transportation and industries.
Price Volatility -: Price volatility means that the prices of something, like oil, can change a lot in a short period of time. This can make it hard to predict how much things will cost.
Strait of Hormuz -: The Strait of Hormuz is a narrow waterway that connects the Persian Gulf to the Arabian Sea. It is a very important route for transporting oil from the Middle East to other parts of the world.
USD 80 per barrel -: This means that one barrel of oil could cost 80 US dollars. A barrel is a unit of measure for oil, and the price can affect how much we pay for fuel and other products.
