It is the eighth day of the war between Iran-Israel. The war between the two countries has now reached a deadly turn. Israel fired missiles overnight after Iran’s attack. In view of the increasing war, the strain has increased more in the Strait of Hormuz. Meanwhile, the credit rating agency ICRA has warned that this blockage can put any continuous hurdle in the supply of oil and gassi, putting heavy pressure on India’s economy.
The rating agency says that the increase in this tension will increase oil imports, increase the current account deficit (CAD) and there will be a delay in private sector investment. The straw of hormuz is a strategic trade route, through which global oil and LNG flow about 20 %. According to ICRA, about 45 to 50 percent of India’s raw oil imports and 60 percent of its natural gas imports pass through this corridor.
Oil prices increased as soon as the war started
The report said that crude oil imports from Iraq, Saudi Arabia, Kuwait and UAE pass through this path and India imports about 45-50% of raw oil from these countries. The conflict began on 13 June after the attack on Israeli’s Iranian military and energy sites. Since then, oil prices have been rising rapidly and increased from $ 64 to 65 per barrel to $ 74 to $ 75 per barrel, which shows the possibility of intervention in supply.
India may suffer strong loss
The ICRA estimates that the increase in average crude oil price by $ 10 per barrel can increase India’s net oil import bill by $ 13-14 billion (about Rs 1.21 lakh crore) in a financial year and can increase by 0.3% of CAD GDP. The agency said, “The continuous increase in conflict may increase the risk for our estimates of crude oil prices and as a result pure oil import and current account deficit.”
Raw oil prices may increase and increase
While ICRA hopes that in FY 2026, crude oil prices will be an average of $ 70-80 per barrel, it warns that long-term conflict in the area can increase prices. The report said, ‘If prices remain at the existing levels, then there will be no significant change in the forecast of GDP growth of India, which has currently been judged at 6.2% for the financial year. However, the continuous increase from current levels will affect the Indian industry.
Upstream oil companies will benefit from high crude oil prices, but the picture is more complex for the downstream area. The ICRA stated that the increase in crude oil and gas prices would be positive for the benefits of upstream companies, even if the marketing margins of downstream companies have adverse effects. He said that there is a possibility of an increase in LPG under-circulation due to high prices.
80 percent of oil is consumed in Asia
The report also states that there are limited options to cross the strait. Saudi Arabia and UAE have pipelines with surplus capacity of about 2.5–3.0 MBD, which may put a significant supply in the event of increasing conflict. More than 80% of the 20 million barrels per day (MBD) oil passing through the hormuz strait is consumed in Asia, with about 65% of India, China, Japan and South Korea.
How much does Iran produce oil?
Although the entire range of damage to the Iranian oil structure is not clear, there have been reports of attacks on refineries, storage centers and energy assets. Iran produces approximately 3.3 MBDs, of which 1.8–2.0 MBD is exported, meaning that any continuous obstruction can deepen global supply imbalance.