Middle East Tension is in full swing in the Middle East and israel -ran war between Israel-Iran is constantly intensifying. Meanwhile, on Saturday, the US Strike on Iran on the Iranian nuclear sites (US Strike on Iran) gave further air to this battle. After this, Iran not only intensified its attacks on Israel, but the Iranian Parliament hurriedly approved the offer of the Strait of Hormuz. Trade around 20 per cent of the worldwide crude is done through this oil route.
Along with America, China, Japan, India is also included in the list of buyers. Even though the government is denying India’s huge impact on the crude import of this route, but according to ICRA data, China, Japan and Korea are the highest imports after SOH. Let us understand how the closure of this oil route can cause trouble for India and what is the government’s preparation to deal with it?
20% of the world’s oil trade via hormuz
According to research firm Ikra, the Iranian Parliament has approved the closure of Hormuz Strait or Strait of Hormuz, it is an important route to deliver crude oil in the world and about 20 percent of the global crude oil and LNG business is through this hormuz route. The special thing is that more than 80 percent of this oil exports to the world through SOH are imported into Asia, in which 65 percent of Crude Oil reaches China, India, Japan and South Korea.
Part from China to India in crude imports
In the ICRA report, in 2024, we look at the crude oil export data done to all countries in 2024 last year, then China was supplied 26 percent, Japan-Corea, 22 per cent, India 14 per cent, European countries, 8 per cent to European countries, 4 per cent to America, 4 per cent to Africa, 5 per cent to Africa. Meanwhile, 22 percent imported in Rest of Asia. Meaning, India and Japan-Korea got the highest oil in India. According to the report of the research firm, the import of crude oil from Iraq, Saudi Arabia, Kuwait and UAE through hormuz is about 45-50 percent of the total crude oil imports in India.
Iran is not easy to shut down hormuz
Look at history, even though there have been many big dangers, the Hormuz Strait has never been closed by Iran. One of the major reasons for this is that Iran Economy itself is dependent on oil and any such decision can not only create trouble for the world, but can also prove dangerous for Iran’s economy. However, on the other hand, Iran has seen a huge jump in Crude Oil Price amid threats to shut down hormuz and it crossed the figure of $ 80 per barrel on Monday.
India is also relieved in crisis due to this step
Despite the threats to intensify the war in Israel -ran and the threats to close the hormuj and the rise in the prices of crude, if we talk about India, then it is seen in the safe zone. We are not saying this, but the Union Petroleum Minister has said amidst the speculation of the Strait of Hormuz being shut down. Our oil supply has been constantly diversity and most of the supply to the country does not come through hormuz, in such a situation it will not have much impact on India. Hardeep Singh Puri, while assuring in his post, said that we have been keeping a close watch on the geopolitical conditions that have been changing in the Middle East for the last two weeks. In case of any obstruction, we will take all the necessary steps to ensure fuel supply stability to our citizens.
Import of crude oil increased from Russia and US
This statement of the Petroleum Minister is relieved in the time of this crisis. He also said that our oil distribution companies have several weeks of oil supply and they are being brought from many other routes. The latest example of this is a surge in oil imports from Russia and America. Yes, while on the one hand, in the fear of closure of hormuz, other countries including China are sweating, then India is increasing its oil import from Russia-Ass. In June, the import of crude from Russia has reached 2 years of high.
Looking at the data released by the Global Trade Analyst firm CPLER, the amount of oil, which arrived in India from these two countries in June, has gone more than the total purchase of traditional middle East suppliers. India is importing 2-2.2 million barrels of Russian Crude Oil per day, while the US imports from June 439,000 BPD per day, which was 280,000 BPD in the month of May.
Significantly, India is the third largest oil importer and consumer country in the world. It imports about 90 percent of its needs Crude oil and more than 40 percent of it is imported from the Middle Eastern countries, which are exported only through the hormuz Strait. According to reports, India brings about 5.1 million barrels of crude oil from abroad, which is converted into fuel like petrol and diesel in refineries.
Soh bandh will have a bad effect!
Even though the government is denying any major impact on India due to the shutdown of the Straight of Hormuz, but despite this, the quantity of crude oil comes to India through this route, its reduction and increasing Crude Oil Price can increase the risk of inflation in the country. In many reports that came after the commencement of Israeli-Iran war, the price of crude is expected to reach $ 120-130 per barrel. In such a situation, the operational cost of shipping companies will increase, Strait of Hormuz i.e. Soh closure will have to change the root and hold the long and expensive route. This will also increase freight cost and delivery time. Increased prices will increase transportation expenses in the country and the prices of essential things can rise. Meaning it can prove to be inflation to increase.