Will the Israel-Iran Conflict Push India’s Fuel and Freight Costs Higher? Here’s What India Might Do Next

With the tension heightening in the Middle East after the latest confrontation of Israel and Iran, India is likely to experience ripple impacts especially regarding the price of oil and freight. Since almost 85 percent of crude oil consumed in India is imported, with a large proportion of it being diverted through Strait of Hormuz, the scenario has created apprehension and backup measures in New Delhi.

Energy analysts indicate that any increase in the war will result in delays in supply chains, increasing the oil prices globally. This would directly affect the fuel import bill and freight charges of India. The Strait of Hormuz is a crucial choke point in international trade of oil, and it is too close to Iran and hence a potential point of conflict. Now, in case transporting by means of such a narrow strait is interrupted, the prices on the freight insurance and delivery might skyrocket.

But apparently, India is treading on such shocks through tactical movements. A report in The Times of India revealed that India has gone ahead to boost the imports of oil in Russia and the United States. The highest contribution to Indian oil imports was almost 36 percent of Russian crude in April alone in two years. There is also a significant increase in U.S. crude delivered to India. This sourcing transformation is not being viewed as a panic change, but as the way to wanting to diversify the energy supply lines, and also to have less reliance on the Middle Eastern lines.

Additionally, there is a report of India strengthening its strategic petroleum reserves (SPR) to insulate them against any temporary shocks in supply. Under a cloak of anonymity government officials have indicated that India may also include long term contracts of fixed prices that will prevent fluctuating spot market prices.

Analysts observed that although the increase in oil prices is a worldwide threat, recent alliances and diverse sources will lessen the strain to an extent in India. The nation has also progressed on the green energy source, solar, ethanol blending, and green hydrogen, which could support mitigating the severity of the shock.

However ordinary people can continue to feel the pain. An increase in crude prices in the world market commonly reflects an increase in petrol, diesel and LPG rates on the consumer side. Also, the higher freight prices may result in higher prices of commodities.

Geopolitics will be watched over closely in days to come. At present, India is simply attempting to put itself at the vanguard, via diversification, international politics and home-grown reserves, so it can avert its economy and its consumers to the danger of a coming fuel-addicted hurricane.

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