The increasing tension in the Middle East has put the whole world on the brink of a new and dangerous crisis. This is being called ‘Energy Lockdown’. The situation is so serious that the South-East Asian country Philippines has even declared ‘National Energy Emergency’.
According to Bloomberg report, this is the first nationwide emergency imposed in the country after the Covid crisis of 2020. The Philippines is completely dependent on the Middle East for its oil needs, hence there is panic there. But the question is whether it will affect India also?
After all, what is this ‘Energy Lockdown’?
If we understand in simple language, ‘Energy Emergency’ or ‘Energy Lockdown’ is imposed when there is a sudden major crisis on the fuel supply (like oil, gas and electricity) of a country. When the supply chain of petrol, diesel and gas is completely broken due to war or any major dispute, the country is not left with enough fuel to meet its needs. Such a situation is called energy lockdown.
When do such situations arise?
Energy lockdown is mainly caused by war or international tension between two countries. When the supply stops, the balance of demand and supply gets disturbed in the market. Its first impact is on the prices of petrol and diesel, which start touching the sky. After this, power production comes to a halt, factories close down and inflation goes out of control. Since India is heavily dependent on imports for its energy needs, such a situation could break the back of the country’s economy.
Have alarm bells rung for India too?
The biggest concern for India is regarding the ‘Strait of Hormuz’. About 20% of the world’s crude oil passes through this route. If this route is closed due to war, oil prices will rise like a rocket. India imports about 90% of its oil requirement from abroad, which is a big challenge for us.
The surprising thing is that India currently has only 9.5 days of strategic oil reserves (Strategic Petroleum Reserve). Prime Minister Narendra Modi has also recently described the war in West Asia as a big challenge in the Lok Sabha. He has warned the countrymen that we have to be mentally prepared to deal with any big challenge like Corona.