India unlikely to face immediate energy supply concerns despite geopolitical tensions
New Delhi, July 13
India is unlikely to face any immediate energy supply concerns despite fresh geopolitical tensions escalating in West Asia, as the country is well-positioned to meet its near-term energy requirements with adequate crude inventories and diversified sourcing, according to industry experts and reports.
The renewed tensions are likely to push up crude oil prices and increase procurement costs for September and October, according to experts.
However, they noted that India's immediate energy security remains intact as the country has already secured crude oil supplies for August and tied up liquefied petroleum gas (LPG) imports.
While some challenges could emerge in liquefied natural gas (LNG) supplies if the disruption persists, these are expected to remain manageable, they added.
Shipping through the Strait of Hormuz remained severely disrupted on Sunday, with vessel traffic slowing sharply following the latest escalation in the conflict.
Experts said the global oil market is better positioned to absorb supply shocks than during the earlier phase of the conflict, supported by higher production from non-OPEC producers and India's efforts to diversify its crude import sources.
Brent crude rose more than 4 per cent to around $80 per barrel on Monday as markets reacted to the renewed geopolitical tensions.
Earlier, Union Petroleum and Natural Gas Minister Hardeep Singh Puri said India has crude oil stocks sufficient for about 60 days, LNG inventories for 60 days and LPG stocks for 45 days.
Officials said there are no immediate plans to reverse the easing of restrictions on LPG and natural gas supplies to industrial users despite the latest escalation.
Experts said the renewed disruption could add a risk premium of $10-$15 per barrel to crude oil prices, potentially pushing Brent crude to the $80-$85 per barrel range.
The latest escalation came after the US and Iran exchanged fresh military strikes on Sunday following Tehran's attack on a vessel transiting the Strait of Hormuz, further clouding prospects for a diplomatic resolution and raising concerns over global energy supplies.
— IANS
Reader Comments
Diversification of sources is smart policy. But why are we always reacting to crises instead of building a robust renewable energy infrastructure? Every time West Asia sneezes, our economy catches a cold. Time to accelerate solar and wind investments! 🌞
As someone working in the logistics sector, I can tell you rising crude prices means higher transportation costs which will eventually pass to consumers. The 60-day buffer is reassuring but we need longer-term planning. The govt should explore more oil deals with Russia and Brazil to reduce Middle East dependency.
Interesting to see India's preparedness. As someone who follows global markets, the non-OPEC production increase from US shale and Brazilian pre-salt fields does provide some cushion. But $85/bbl Brent will test the fiscal discipline of emerging economies like India. Hope the fiscal deficit targets are maintained.
Why are we always talking about crude? What about the common man's cooking gas and auto fuel? LPG stocks for 45 days is fine, but if prices spike, it's the lower middle class who will suffer the most. The govt should consider a temporary cut in excise duty on petrol and diesel to soften the blow. 🤔
The Strait of Hormuz disruption is serious business for global energy security. India's 60-day reserve is decent, but many European countries mandate 90-day reserves. The LNG concern is valid - if Qatar and Iran get caught up, spot LNG prices could spike. Hope the govt has also locked in some long-term LNG contracts.
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