If Hormuz remains closed and oil does not arrive, for how many days will India’s work last?

Amidst the increasing tension with Iran, India may face a big challenge if there is an interruption in the supply of crude oil through the Strait of Hormuz. However, according to an assessment by energy market analysis firm Kpler, India currently has enough crude oil reserves to meet its oil needs for about 40 to 45 days.

According to Kpler, India has a total stock of about 100 million barrels of crude oil. This includes commercial reserves kept near refineries, underground strategic petroleum reserves (SPR) and crude oil loaded in oil carriers heading towards the country. This stock will act as a buffer against any short-term supply crisis.

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Why is the Strait of Hormuz the lifeline of India?

India imports about 88 percent of its crude oil needs. More than half of the total imports come from West Asia and a large part of it passes through the Strait of Hormuz. The country imports an average of about 5 million barrels of crude oil daily, of which about 2.5 million barrels per day come through the Strait of Hormuz. In such a situation, any obstruction in this sea route can have a direct impact on India’s energy security.

According to Sumit Ritolia, principal analyst at Kpler, if the supply of oil from West Asia stops for some time, it will have an immediate impact on the supply chain and prices. However, refineries generally hold sufficient commercial stocks and the arrival of previously departed vessels may provide some relief. But if the crisis drags on, the pressure on the import bill will increase due to increased costs of purchasing oil from alternative sources, transportation and insurance.

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Meanwhile, the price of global oil benchmark Brent crude has exceeded $ 80 per barrel, which is about 10 percent higher than before the Iran crisis. In the last financial year, India spent $137 billion on the import of crude oil. In the April-January period of the current financial year alone, the import bill has exceeded $100 billion.

What is Plan-B?

Experts believe that if needed, India can meet the shortage by importing more supplies from West Africa, Latin America, the United States and Russia. Right now, the biggest threat is from rising prices and rising import bills rather than physical shortage. If this crisis continues for a long time, it may affect both inflation and the economy.