India may face ripple effect of Iran-Israel tensions as global oil prices soar
India imports about 87% of its crude oil requirement;
Guwahati, June 17: Although India is not directly affected by the Iran-Israel war, the sharp increase in international crude prices will severely impact India, as the country heavily relies on oil imports. Disruption in production by an oil-producing country results in a sharp hike in international prices.
Official sources told The Assam Tribune that India heavily depends on imported crude as the oil production in the country is not adequate to cater to the demand. At present, India imports around 87 per cent of the crude oil requirement.
That is why, any increase in international crude oil price results in an increase of oil prices in the country. As Iran is an oil-producing country, international oil prices started increasing as soon as the war broke out between Iran and Israel. During the last few days, the prices increased by around eight per cent.
Sources revealed that India imports crude mostly from Iraq, Russia, Saudi Arabia, the United Arab Emirates and the United States. Imports from Iran are very minimal. Still, India will have to face the consequences of the international price hike.
Another disturbing fact is that if the war continues for a long time, the shipping routes will be affected and there will be a major challenge of transportation of oil to India.
Sources said that most of the sea routes bringing oil to India come through the Middle East and if the war continues for a long time, the shipping routes can be affected. In such a scenario, India may face a shortage of crude. But at this moment, India has sufficient stock of crude and the shipping routes are not affected. But no one can predict what will happen if the war lingers on for a long time, sources added.
Sources said that the Strait of Hormuz is the most vital shipping lane used by Organization of Petroleum Exporting Countries (OPEC) members, including Saudi Arabia, Iraq, and Kuwait, to transport oil to Asia, including India and the war can disturb that corridor. If it happens, the oil flow to India may be badly hit.
The second major corridor is the Eastern Maritime Corridor. This route connects Vladivostok (Russia) to Chennai, significantly reducing transit time and costs for Russian crude oil shipments. This corridor is unlikely to be hit.