The deepening military tension between America, Israel and Iran is holding the entire world’s breath. After the death of Iran’s Supreme Leader Ayatollah Ali Khamenei in the Israeli attack, the situation has become completely out of control. After this major shock, Iran has retaliated by closing the Gulf of Hormuz, one of the world’s most important trade sea routes.
Now this is not just a geographical fight between these countries, but it is going to have a direct impact on the whole world. The heat of this fire burning in the Gulf countries can scorch the Indian economy as well. There has been huge turmoil in the crude oil market and the fears that this crisis will drag on are now deeper than ever. In such a situation, let us understand what backup plan India has to deal with this.
Crude oil will cross 110 dollars
The Gulf of Hormuz is considered the biggest lifeline of oil supply globally. About 20 percent of the world’s crude oil passes through this narrow sea route. Closing this route by Iran directly means creating a huge shortage of oil in the global market. Its serious signs have also started appearing in the international market. On Friday, benchmark Brent crude futures closed at $ 73 per barrel. If we look at the data of the last one month, a sharp jump of $ 6 per barrel has been recorded in the prices of crude oil.
Industry experts believe that the scope and purpose of the current US and Israeli action is much larger than the disputes that took place last year. Considering Iran’s tough stance, this war may turn into a long conflict. This time the consequences of the war could be much more dire. If this conflict prolongs, crude oil prices could reach a dangerous level of $ 110 per barrel, which would be a huge blow to economies around the world.
Will petrol and diesel become expensive in India also?
Whenever there is a rise in the prices of crude oil at the international level, the first question that arises in the mind of the common Indian consumer is about the prices of petrol and diesel. It is a matter of relief that at present there is no need for the common citizens of the country to panic. There has been no major change in the retail prices of petrol and diesel in the country for the last three years. Government oil marketing companies do not immediately pass on the direct burden of international market fluctuations to the customers. Therefore, in the short term you will not have to burn a hole in your pocket at the petrol pump.
However, this does not at all mean that India is safe from this international crisis. Due to increase in crude oil prices, the refining margin of Indian refinery companies will shrink badly. Since India imports a large part of its energy needs, expensive crude oil will have a direct impact on the country’s total import bill. When we will have to spend more foreign currency to buy oil from outside, the country’s current account deficit will increase rapidly. The final and most dangerous result of this will come in the form of huge pressure on the Indian Rupee, which is a worrying situation for the overall economy of the country.
What ‘backup plan’ does India have?
An attack on any oil base in the Gulf region completely affects the global supply chain and prices start rising. The Gulf of Hormuz is the most important center of India’s energy security. 40 percent of India’s total crude oil imports and 55 percent of Liquefied Natural Gas (LNG) reach the country through this important route. Even if the Strait of Hormuz remains open for some time, prices will remain high for a long time under the looming cloud of war.
In view of this serious situation, Indian refinery companies have fully geared up and have prepared a strong backup plan. According to experts, to deal with this suddenly arising supply crisis, contingency plans are being worked on rapidly. Under this master plan, oil will now be loaded from those ports which do not pass through the Gulf of Hormuz. Indian companies are preparing to use such alternative ports of Saudi Arabia and United Arab Emirates (UAE) so that the supply continues uninterrupted. Along with this, a strategy is also being made to place additional orders for crude oil to oil producing countries outside the Gulf region, so that India can face any adverse situation strongly.
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