Open, closed, closed but open – the Strait of Hormuz has become the center of the ongoing US-Iran conflict and its blockade a key factor in pressure tactics from both sides. The Strait of Hormuz is a critical channel for nearly one-fifth of global oil trade. The result is that economies dependent on the Middle East for energy supplies stare at disruptions and uncertainties. India is among Asian economies which require ships to transit smoothly through the Strait of Hormuz for its crude, LPG, and LNG needs. Since deciding to restrict access to the vital energy corridor last month during its conflict with the US and Israel, Iran has intermittently allowed Indian vessels to pass through.The situation has, however, become more complicated now. A few days ago Iran declared that the Strait of Hormuz was open, but the US maintained its blockade of ships heading to or out of Iranian ports. This led Iran to close the Strait of Hormuz again.Also Read | Explained: On way to 4th largest, how India slipped to 6th rank & what it means for 3rd largest economy dream
Iran’s Hormuz blockade and firing on Indian flagged vessels
The Indian-flagged tanker Desh Garima, carrying crude oil, successfully passed through the Strait of Hormuz on Saturday afternoon. However, two other vessels, Sanmar Herald and Jag Arnav, came under fire from boats of Iran’s Islamic Revolutionary Guard Corps (IRGC) while navigating the conflict-hit route and were forced to turn back. No injuries were reported among the crew.India summoned Iranian ambassador Mohammad Fathali on Saturday to convey its “deep concern” over the firing incident. During the meeting, Foreign Secretary Vikram Misri underlined the importance India places on the safety of merchant vessels and seafarers, while recalling that Iran had earlier ensured secure passage for ships bound for India.He urged the envoy to communicate India’s position to authorities in Tehran and called for the swift restoration of safe transit for Indian-bound ships through the strait. The Ministry of External Affairs said the ambassador agreed to relay these concerns.
What this means for India
Data from MarineTraffic shows that several Indian and foreign ships headed for Indian ports are still awaiting clearance near the Strait of Hormuz. Official figures indicate that 13 Indian vessels are currently in the Persian Gulf (west of Hormuz), six in the Gulf of Oman (east of Hormuz), one in the Gulf of Aden, and three in the Red Sea.
According to the petroleum ministry, 17 vessels have been identified for evacuation including four LPG carriers, three LNG carriers, and 10 crude oil tankers. Of these, three are Indian-flagged, while the remaining 14 are foreign vessels.Separately, the chemicals and fertilisers ministry has prepared a list of 16 additional ships for evacuation, including one Indian-flagged vessel (Jag Arnav) which was targeted by the IRGC on Saturday.Since the start of the US-Iran war, India which depends largely on imports for its energy needs has seen supply disruptions that have in particular impacted LPG availability. The government was forced to direct supplies for domestic consumption, and restrict commercial availability.According to the latest update from the government, domestic LPG supplies continue to face some disruption due to the prevailing geopolitical situation, though distribution to households has been prioritised.Also Read | Oil price shock loading: How India’s strong economic fundamentals will cushion the blow – explained in chartsOn the commercial side, allocations have been raised to around 70% of pre-crisis levels, including reform-linked supplies.On the crude front, India has aggressively stepped up procurement of Russian crude oil since the start of the conflict. In fact, India’s imports of Russian oil are now near their June 2023 highs and the flows are unlikely to abate in the near term. This has been aided by the Donald Trump administration to waive sanctions on Russian oil for a month, and then later extending it by another month.
Experts are of the view that while India’s crude oil basket is diversified, and Russian crude availability makes the situation less worrisome, LPG and LNG may continue to be an area of constraint.Sumit Ritolia, Manager Modelling and Refining at Kpler told TOI, “India’s crude oil supply currently appears stable to cover domestic demand, supported by continued imports from Venezuela, West Africa, and other key suppliers, alongside the extension of the US sanctions waiver, which allows access to Russian crude already at sea to meet near-term requirements. April Russian barrel import has picked up to around 1.6 mbd for now and with a possibility of further increase.”However, LPG and LNG supplies remain relatively constrained, he noted. “According to Kpler data, at least two LPG tankers are presently stranded near the Strait of Hormuz. Should the blockade persist particularly if restrictions extend to Indian-flagged vessels there could be emerging supply challenges in the coming days,” he added.
