The ongoing conflict between Israel and Iran is not expected to have a significant impact on India's crude oil imports, as experts pointed out that India's crude imports from Iran are almost negligible.
India currently imports oil from around 40 different countries, including Russia, Iraq, Saudi Arabia, Abu Dhabi, and the USA, which helps manage its supply needs. However, the conflict does increase the risk of price volatility in global oil markets.
Experts suggest that any sharp rise in crude oil prices above USD 80 per barrel is likely only if the conflict escalates and disrupts key supply routes, such as the Strait of Hormuz, a critical passage for global oil shipments.
"India's has almost nil supplies of crude oil directly from Iran. India have also been able to adopt a very balanced and matured approach in such situation as seen in recent international conflicts. Therefore, crude oil supplies may not be an issue as such for India but price volatility will be there with momentary spikes and monthly average prices on higher side. Any increase in average crude oil prices above USD 80 should be expected only in case of a serious conflict escalation in the logistic supply lines like Strait of Hormuz" said MK Surana, Former Chairman, HPCL told ANI.
While India's oil supply may not be directly affected, experts noted there is concern about temporary price spikes and higher monthly average prices due to the heightened geopolitical tensions.
The crude oil prices have already surged due to the volatility in the Middle East. If Israel follows through on its threats to attack Iran's oil and gas infrastructure, it could lead to further price increases. Iran, which produces about 3.3 million barrels per day (mbpd) of crude oil, might retaliate by blocking the Strait of Hormuz, causing major disruptions in global oil supply.
Experts added that such a scenario would pose a challenge for India, as the country imports 88 per cent of its oil requirements and relies heavily on oil for its energy needs.
"The real problem will be a much higher price, which will be a huge challenge for our economy as well policy makers. India imports 88 per cent of its total requirements of oil, mainly from Russia, Iraq, Saudi Arabia, Abu Dhabi and the USA among others. India is still largely an oil-based economy" said Narendra Taneja, India's leading energy expert, in an exclusive conversation with ANI.
While the conflict raises the risk premium on oil prices, weak global demand projections, uncertainty surrounding China's economic recovery, and the possibility of OPEC+ rolling back production cuts may ease the impact.
Additionally, resumed oil production in countries like Libya could provide some relief. However, higher crude oil prices will still pose a significant challenge for India's economy and policymakers. (ANI)
