'Supplies Diversified': Will Iran's Move To Close Strait of Hormuz Impact India's Oil Trade?

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The Strait of Hormuz, vital for oil trade, may close due to US-Iran tensions. India, importing 1.5M barrels through it, is seeking other suppliers for stable fuel.
For 50 years, the crucial Strait of Hormuz – a key global oil shipping route – has remained open. But with increasing pressure from the US, the possibility of its closure is becoming more likely as Iran threatens this step.
Before discussing how such a closure could affect Indians, it is important to understand the significance of the Strait of Hormuz.
It is the world's most vital passage for oil trade, acting as a choke point between the Arabian Gulf and the Gulf of Oman. This strait is the sole route for a fifth of the world's oil production and liquid natural gas.
Around 20 million barrels of oil pass through this strait daily. While India imports about 5.5 million barrels, 1.5 million barrels come through this route.
At present, the central government is not overly concerned. India has a three-week supply, although this may not suffice if demand rises. The government is more focused on monitoring the situation to prevent hoarding, black marketing, and public panic.
Petroleum and Natural Gas Minister Hardeep Singh Puri said for the past two weeks, India has been closely monitoring the evolving geopolitical situation in the Middle East.
'Under PM Narendra Modi's leadership, India has diversified its supplies over the past few years, reducing reliance on the Strait of Hormuz," he said.
'Our oil marketing companies have several weeks of supplies and continue to receive energy from various routes. We will take all necessary steps to ensure the stability of fuel supplies for our citizens," he added.
Regarding other exports, sources indicated minimal impact. Over 90 per cent of Indian shipments to the two largest markets, the US and Europe, use the longer route via the Cape of Good Hope. Only 5 to 6 per cent of the traders use the Red Sea route.
Exporters have reassured the government and, after a recent meeting, they have been assured that the strait's closure should not cause significant concern. Any turmoil in the area, however, leads to uncertainty and the longer it lasts, the greater the anxiety.
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