Big Alert for India: ‘This’ crisis is more serious than oil; Government’s tension is increasing due to limited options
- A bigger threat to India than the scarcity of crude oil
- India depends on Strait of Hormuz
- Difficult to replace LPG supply
Criss Bigger Threat Than Oil for India : If the current global war situation and this conflict in West Asia continue, India may face a bigger threat than the shortage of crude oil. Its repercussions are currently being seen all over the country. In this scenario, the Strait of Hormuz is emerging as a major pressure point for the country’s energy security, warned a report by Sriram Asset Management. He explained this in a report titled “The Iran Crisis: Its Implications for India and Markets”. For India, the threat to LNG supply is more serious than oil, as the country has limited gas import options. Meanwhile, crude oil can still be sourced from other regions.
Shortage of LPG cylinders! This ‘big appeal’ from the central government to 60 lakh families
India depends on Strait of Hormuz
India is heavily dependent on the Strait of Hormuz for its energy supply. About 55-65% of its LNG imports pass through this narrow strait. Qatar alone accounts for about 40% of India’s gas imports. Prolonged disruptions in this sector could lead to major disruptions in supply. Its impact will be seen in the daily life along with the industries all over India.
The crisis escalated after the US and Israel attacked Iran’s nuclear and military facilities in late February. In response, Iran launched retaliatory attacks in the Gulf region. So the situation worsened when Iran began laying naval mines in the Strait of Hormuz, threatening to almost completely shut down one of the world’s most important energy transport routes. Approximately 150 vessels, including oil and LNG tankers, pass through the strait daily. The threat of mines can disrupt shipping. Insurance companies often refuse to insure tankers entering conflict zones.
Difficult to replace LPG supply
The report also said that while oil markets have reacted strongly to these developments, India may try to offset some of the disruption in crude oil supply by increasing imports from Russia or using alternative sea routes for ships coming from Saudi Arabia. But due to limited availability in the global market, LPG supply is difficult to procure from other sources. Ships from America, Africa or Australia take longer to arrive and are therefore more expensive.
Signs of stress in the domestic market
There are already early signs of stress in India’s domestic market. Gas shortage has affected many industries. Available supplies are now being diverted to priority areas such as households, hospitals and fertilizer production. Fertilizer and chemical manufacturers are heavily dependent on imported raw materials, which poses the risk of product shortages. Meanwhile, gas distribution companies in the city have also reduced gas supply to industrial and commercial customers, according to reports.
Big loss if obstruction persists
The report also said that disruptions in LPG supply are causing long delays in bookings in many areas. In response to the supply shortage, the government recently raised domestic cylinder prices. If this disruption continues, these rising prices can also hurt companies’ revenues. According to estimates, if crude oil prices increase by $20 per barrel for one year, revenue could decline by approximately 4%. Gas shortages, production cuts and low demand are likely to lead to further losses. On the other hand, some sectors may benefit from this crisis. Rising global commodity prices can lead to higher returns for energy-related oil and gas producers, refiners and metals companies.
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