Amid rising prices of petrol and diesel across the world, a recent statement by US President Donald Trump has become a topic of discussion in the international energy market. Globally, it was believed that crude oil prices were rising due to increasing tension in the Middle East and the fear of supply disruption in the Strait of Hormuz. However, Trump has rejected this notion outright, claiming that the Strait of Hormuz is not responsible for the surge in oil prices. According to him, oil export from there continues at a record level. Trump has directly blamed the rising prices on the Russia-Ukraine war and domestic and global problems related to oil refining. Donald Trump blamed Ukrainian attacks on Russian refineries as the main reason Donald Trump, while sharing his views on the social media platform 'Truth Social', said that Ukraine's continuous drone and missile attacks on Russia's energy infrastructure, especially oil refineries, have severely affected the supply of fuel in the global market. Russia is one of the world's largest oil and diesel exporters. Due to Ukraine's precise attacks, the production capacity of many major refineries of Russia has come to a standstill, due to which the shortage of refined fuel has increased in the international market. Trump says that until refining capacity returns to normal, prices of finished petrol and diesel will remain under pressure despite the flow of crude oil. Targeting America's closed refineries and domestic politics, along with international causes, Trump also took on America's internal energy policies. He cited the closure of domestic refineries in Democratic Party-led states (Blue States) as a major reason for fuel inflation. They allege that due to strict environmental regulations and policies, many traditional refineries were closed, due to which America is not able to take full advantage of its own crude oil production capacity to petrol pumps. Rising inflation has become a major political issue in the run-up to the upcoming US midterm elections, and Trump is blaming the past policies and administrations of opposition states for the situation. The Strait of Hormuz and the Mathematics of Global Supply Strategically, the Strait of Hormuz is the world's most sensitive energy chokepoint, passing through about 20 percent of the world's crude oil. Market analysts were constantly warning of its closure or disruption of shipping due to tensions in the Middle East. But Trump clarified that large numbers of oil barrels are coming out of the waterway without any major disruption. In this way, he tried to prove that the problem lies not in the availability of crude oil, but in the limited capacity of global refineries to convert it into petrol, diesel and aviation fuel. What will be its impact on India and global consumers? High prices of crude oil and fuel directly impact large economies like India, which import more than 85 percent of their total oil consumption. If fuel products remain expensive due to shortage of refineries and Ukraine-Russia conflict, the cost of importing Brent crude as well as finished fuel in the international market will increase. This may impact freight traffic and prices of common consumer goods. Energy experts believe the fuel market is likely to remain volatile unless refinery capacity improves and geopolitical conflict subsides.
