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Mint
7 days ago
- Business
- Mint
Israel-Iran conflict: War and oil could both flare out of control
It was a forex crisis fuelled by a volatile mix of oil and war in West Asia that led India to open up its economy. Flare-ups of hostility in that region are less impactful today, but Israel's Friday attack on Iran and push for regime change should make us sit up in alarm. Within hours of Tel Aviv's Operation Rising Lion, the global price of crude oil spiked. Accusing Tehran of making a dash for nukes, Israel targeted Iran's military set-up and top leaders, apart from nuclear scientists, and some uranium enrichment sites. A day earlier, the International Atomic Energy Agency (IAEA) had held Tehran in breach of the Non-Proliferation Treaty. The US first said Israel's action was unilateral, but the White House urged Iran's regime to sign a deal with America, warning of worse strikes ahead. Also Read: Javier Blas: An Israel-Iran war may not rattle the oil market While Iran-US talks over a nuclear pact had been fractious, Tehran's rhetoric and retaliation since Israel's offensive show it's ready for armed combat. While Israel's 'iron dome' has fended off most Iranian drones and missiles, Israeli targets have been hit. As a tit-for-tat spiral ensues, last October's hostilities look like a faint shadow of this flare-up. Should this war worsen, will Tehran target US military bases in the Gulf or disrupt oil supplies? A choke-point is the Strait of Hormuz, through which a fifth of the world's crude-oil supply and most of India's is shipped. Global oil demand had flagged lately, even as Opec's recent easing of output curbs signalled a market glut. With the Saudi-led cartel's play for market share now likely to fail if hardening prices attract more US shale production, it may revert to a tight-supply stance. How much dearer could oil get? Also Read: Escalating Israel-Iran conflict to keep markets on boil in near term On Friday, Brent crude gave up its initial gains to settle at around $74 per barrel. This is moderate, but a $100-plus scenario can't be ruled out. An Iranian oil depot and gas field were bombed. Iran's oil output is only 1.7% of the world's. But if others' oil facilities are set ablaze or Hormuz is choked by Iran—risks that will soar if US forces join battle—all bets would be off. Sure, the market has mostly held steady since October 2023, when a terror strike by Iran-backed Hamas on Israel sparked the Gaza War, but the past may prove to be a poor prologue. An Iran pushed into a corner might strike hard at American interests or rush to rattle the nukes allegedly being built in deep underground cavities. Also Read: India concerned about crude oil supply disruptions in Strait of Hormuz as prices surge after Israel's attacks on Iran India's dollar scarcity turned into history long ago. Barring an overall trade seize-up, only if a barrel of oil hits triple digits would our balance of payments become a worry. As for fuel-stoked inflation, high fuel taxes offer a buffer, given the scope for their reduction to soften retail prices. Yet, this comfort could combust. Mighty as the US-Israel alliance is, any use of force to snuff out a threat can backfire. It is unclear if the offensive's calculus took into account China's quiet quest for influence across the region's sectarian divide, let alone the 'Gaza effect' on popular Arab views of the Islamic Republic's defiance of the US and Israel. Politically, Tehran's regime cannot afford to back down. How costly this conflict will prove is marked by uncertainty—beyond the scope, i.e., of a probability estimate. A climate-friendly shift away from hydrocarbons has been snail-paced both globally and at home, Indian imports are rising faster than any other major energy market's, and domestic drilling has been of little aid. In effect, we have a big stake in West Asian stability. With oil above $100 back on the risk radar, the premium on peace has risen. Overpriced energy mustn't get a chance to impede our dash for prosperity.
Mint
15-06-2025
- Business
- Mint
Ajit Ranade: West Asia's upheaval intensifies India's challenges of geopolitics
Next Story Ajit Ranade The Israel-Iran war will make it harder for New Delhi to navigate global turbulence even as an oil flare-up poses a threat. But it could also spur domestic policy changes—in favour trade diversification, for example—that strengthen our economy. The fallout of the hostilities: Over a hundred people already killed, cities plunged into fear, critical infrastructure damaged and diplomacy left in the rubble. Gift this article The world crossed a dangerous threshold on 13 June. Israel attacked Iran, targeting nuclear facilities, military bases and even residential zones in order to kill top military leaders and nuclear scientists. Israel sees a nuclear-armed Iran as an existential threat and says that Iran's uranium enrichment programme had reached a point where a nuclear weapon was just weeks away. The world crossed a dangerous threshold on 13 June. Israel attacked Iran, targeting nuclear facilities, military bases and even residential zones in order to kill top military leaders and nuclear scientists. Israel sees a nuclear-armed Iran as an existential threat and says that Iran's uranium enrichment programme had reached a point where a nuclear weapon was just weeks away. The enrichment, while in violation of Iran's commitment to complying with nuclear safeguards, as noted recently by the United Nations' watchdog, was still nowhere close to weapons grade, as per US experts. Hence Israel's unprovoked attack was a big shocker. Israel so far had stopped short of full-scale war, preferring sabotage, cyber-attacks and targeted killings. But now Israel has crossed a line of no return for itself, Iran and the world. Iran launched a counter attack with over 200 ballistic missiles. It aimed at more than 150 Israeli targets that included nuclear sites and residential zones. Also Read: Javier Blas: An Israel-Iran war may not rattle the oil market The fallout of the hostilities: 130 people already killed, cities plunged into fear, critical infrastructure damaged and diplomacy left in the rubble. This escalation by Israel into war has upended Middle Eastern geopolitics. What was once a high-stakes diplomatic standoff has now escalated into a military confrontation. This will likely spiral up, notwithstanding global voices for restraint. From a statement of US President Donald Trump, it is obvious that Israel had tacit American support, with all its military might. He has been drawn into making a choice that he would have rather avoided: i.e., choosing between playing peacemaker and backing Israel solidly. On the other hand, all the Gulf states have condemned Israel's strike. But some like Saudi Arabia and the UAE might be quietly relieved at Iran's weakened position. Riyadh is Tehran's rival in a quest for regional dominance. China has stayed pointedly silent. Iran is central to its energy security and infrastructure ambitions for the Belt and Road Initiative, but Israel is also a key technology partner. Maybe China wants to position itself as a non-interventionist peacemaker, striking a contrast with unconditional support by the US for Israel, the aggressor. This Middle East distraction for Washington can work to China's advantage, as it gains manoeuvring space to flex muscle on Taiwan and in the wider Indo-Pacific. Russia had asked for an immediate Security Council meeting and resolution, knowing full well that the US will stonewall it with a veto. Hence its condemnations have lacked force. The Shanghai Cooperation Organization (SCO), of which India is a member, has condemned Israel's attack, but India has carefully distanced itself from the SCO's common statement. Europe is alarmed by Israel, but not sympathetic to Iran, given the latter's record on enrichment. These actions of various international players reveal a global system where major powers are acting increasingly based on narrow transactional interests rather than any shared security architecture. It has injected fresh volatility into an already fragile global order. Israel has America's political, military and diplomatic support, whereas no major power is unequivocally with Iran. At most, it has ambivalent, conditional or weak support from various quarters. Non-state actors that could have aided it, such as Hezbollah and the Houthis, have been weakened. Hence, Tehran's resilience will be tested and it might resort to desperate measures. It has threatened strikes on the military bases of Israel's allies. These include US bases. It has also drawn attention to another lever of high-impact force with a threat to bar the movement of oil through the Strait of Hormuz, from where 20% of the world's oil flows. Meanwhile the Ali Khamenei administration is facing strong opposition at home, which Israel has sought to exploit. Instability in West Asia affects India deeply, for the stakes are immediate and structural. Some 60% of India's crude oil passes through the Strait of Hormuz. We have 8 million citizens in the Gulf region. Oil prices above $100 will worsen inflation, widen the current account deficit, hasten the rupee's fall and strain the fiscal deficit. Last year net inbound foreign direct investment (FDI) was almost negligible. Investors will now adopt a wait- and-watch attitude, thus hurting our growth prospects. New Delhi has to balance its energy security and Chahabar interests in Iran with its tech and defence partnership with Israel. It cannot remain silent on Israel's attack on Iran sovereignty because that would seem like moral abdication. This is the third such conflict where India finds itself locked in a narrow diplomatic navigation route and forced into a tight balancing act. Can New Delhi publicly and strongly condemn Russia in Ukraine? Can it condemn Israel's ongoing treatment of people in Gaza? It has to protect its strategic autonomy, while remaining a credible power with aspirations to UN Security Council membership and great power status. India's response reflects preference for non-alignment and quiet diplomacy. Also Read: Israel's war on Iran to hit Indian workforce India's foremost priority is the domestic economy, given our vulnerability to commodity prices, oil, exchange rates and investment flows. We cannot count on discounted Russian crude, not least because of the likely US reaction. Our free trade agreement with the UK will kick in next year, and a treaty with the US is uncertain. The big rate cut by the Reserve Bank surprised the market, but now in hindsight seems like a great pre-emptive strike. A large monetary stimulus will be useful ahead of signs of economic weakening. There is also massive liquidity injection. Prior to the present conflict, the 2025-26 GDP growth estimate of 6.5% was the lowest in four years. It might get worse, along with world growth, as even the World Bank's Global Economic Prospects points out. India's private sector investment-to-GDP ratio has been stagnating at 10% for a decade. A recent government survey of private sector capital expenditure intentions points to a decline this year. The government will have to keep up public capex to provide a growth impetus, as it has done in the past four years. On FDI, we must think creatively, as we need at least 2% of GDP on a net basis. New Delhi must revisit its stance on Chinese investment to allow it at least in non-sensitive sectors, such as automotive products (especially electric vehicles), infrastructure and renewable energy. Chinese exports can use Indian value chains. In the medium term, we need to diversify our energy sources and export markets. Our services export boom must go beyond Western customers. And, of course, we need a great thrust on building human capital, skilling and research. Paradoxically, the West Asian crisis might be an opportunity for India to emerge stronger with a bigger stature. The author is senior fellow with Pune International Centre. Topics You May Be Interested In Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Mint
13-06-2025
- Business
- Mint
Israel's war on Iran to hit Indian workforce
Israel opening a warfront with Iran will impact workforce mobility from India to many parts of the Middle East. Recruitment companies with clients in the IT, energy, construction and retail sectors estimate a drop in demand for fresh workforce as the crisis escalates. Some manpower companies had calls from candidates on probable changes in joining dates and the hiring firms have held meetings since Friday. Mint has learnt that both blue and white-collared workforce who head to the region every year for opportunities will be reluctant to relocate to even bordering countries that are yet to face the heat. 'We currently have 35 executives from mid to senior management levels scheduled to join roles across Kuwait and other Middle Eastern countries. These positions are primarily within the energy sector, including oil field operations and a significant number of these professionals are US nationals," said Manish C., managing partner, Greentree Advisory Services. Also read: Javier Blas: An Israel-Iran war may not rattle the oil market The firm's clients are in the banking and energy sectors, amongst others. 'Since Friday, we have received several calls from candidates expressing concern, particularly those relocating with their families. The hiring companies have assured us that they are closely monitoring the situation and will keep all stakeholders informed," the managing partner told Mint. In the early hours of Friday, Israel attacked Iran's nuclear bases and called it Operation Rising Lion. Until now, the Middle East crisis has largely involved Israel's attack on Gaza. The external affairs ministry in its statement noted that it was 'monitoring the evolving situation, including reports related to attacks on nuclear sites". A steady stream of blue- and white-collar workers regularly head to countries like Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman, which share maritime borders with Iran. 'Our Missions in both countries are in contact with the Indian community. All Indian nationals in the region are advised to exercise caution, stay safe and follow local security advisories," the external affairs ministry said in a statement on its website. Also read: Escalating Israel-Iran conflict to keep markets on boil in near term 'We hire IT employees from India for the Middle East and also from Lebanon and Egypt for the Middle East region. We are focusing on this region extensively, but now if the war escalates and spreads to nearby areas, then our hiring gets impacted," said Anshuman Das, chief executive and co-founder of Careernet, a talent solutions provider. According to government data from July 2024, there are 92,58,302 skilled, semi-skilled and unskilled labourers from India employed in various sectors in the Middle-Eastern countries of Bahrain, Kuwait, Oman, Qatar, United Arab Emirates and Saudi Arabia. In fact, Israel too has recruited thousands of skilled workers from India over the last couple of years. Genius Consultants, which caters to retail and construction clients in the Middle East, estimates an immediate hit to the number of workers accepting offers. 'We estimate a 35% drop in the hiring numbers in the UAE region," noted R.P. Yadav, chairman and managing director of the recruitment firm. Also read: Who is Gen. Abdolrahim Mousavi? Iran names new Army chief after Israeli strikes kill commander: 'Declaration of war…' Ironically, the Middle East and Russia are some of the prominent regions that attract Indian workers because the clients often pay higher compensation than their Indian counterparts. In fact, this exodus has hit Indian construction and real estate firms, which have flagged a shortage of skilled and unskilled workers.
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First Post
09-06-2025
- Business
- First Post
Cone crisis? Why ice cream prices are soaring this summer
An analysis by British consultancy firm Rift found that the cost of ice lollies and cones in UK supermarkets increased by 7.6 per cent in May. With the global ice cream market estimated at $81 billion (nearly Rs 7 lakh crore) in 2024, there is increasing attention on rising prices. Notably, coconut oil, a key ingredient in many ice cream products, has become more expensive, leading to the overall price hike read more An analysis found that prices of ice lollies and cones in UK supermarkets rose by 7.6 per cent in May. Image: Pixabay/Representational Summer and ice cream go hand in hand. But what if that chilled treat ends up costing more right when the heat is at its peak? An analysis by British business consultancy Rift found that prices of ice lollies and cones in UK supermarkets rose by 7.6 per cent in May. ALSO READ | Having ice cream to beat the heat? Here's why it's not the best idea With the global ice cream market valued at $81 billion in 2024, there is a growing focus on what is behind these changing prices. STORY CONTINUES BELOW THIS AD So, what's pushing ice cream prices up, and which parts of the world are behind the impact? We answer these questions: Why ice cream prices are rising this summer Coconut oil is an essential ingredient in many ice cream products, and its rising cost has pushed up ice cream prices this year. As demand continues to be higher than supply, prices are expected to go up further. Further price gains are likely as demand continues to outpace supply. Last year, the ice cream industry brought in close to $80 billion in sales. Image: Pixabay/Representational Last week, coconut oil from the Philippines, being sold wholesale in Netherlands' Rotterdam, crossed $2,700 per metric ton. That's almost twice the price compared to the same time last year and roughly 200 per cent higher than the average between 2000 and 2020. The earlier peak was in 2011, when prices touched around $2,300, as per a Bloomberg column by Javier Blas. Coconut oil is widely used in the food industry due to its high melting point. It helps ice cream, especially gelatos and varieties with hard shells, stay solid at room temperature without changing the taste or texture. Ice cream is a major global industry. Last year, it brought in close to $80 billion in sales. What is driving coconut oil prices up? Coconuts grow best in tropical climates with plenty of sunshine and rain. But over the past year, weather patterns have disrupted this balance. The El Nino phenomenon, which causes warmer sea surface temperatures across the Pacific, brought drier conditions to Southeast Asia from June to October last year. This has had a direct impact on coconut production in Indonesia and the Philippines, which together supply about three-quarters of the world's coconut oil. STORY CONTINUES BELOW THIS AD Because coconut trees take around a year to bear fruit, the dry spell has resulted in smaller yields in 2024, reducing the available supply. Coconut oil is an essential ingredient in many ice cream products. Image: Pixabay/Representational However, this decline alone was not enough to cause the sharp spike in prices. The bigger factor lies in a different part of the coconut market: biofuels. In the Philippines, the government requires diesel to be blended with coco methyl ester, a fuel additive made from coconut oil. At first, this policy had little effect on overall supply. But in October last year, the blending target was raised to 3 per cent, with plans to reach 4 per cent by late 2025 and 5 per cent by the end of 2026. ALSO READ | How a Chinese company beat Starbucks, McDonald's to become world's largest fast-food chain Which countries should be watched? The Philippines is the largest producer in this market, accounting for 45 per cent of the world's coconut oil. As the government shifts large volumes of coconuts into biofuel production, ice cream prices in the United States and Europe are expected to rise as a result. STORY CONTINUES BELOW THIS AD If current plans are followed, the Philippines will divert around 4.5 billion coconuts to produce the 500 million litres of coco methyl ester needed to meet its biodiesel targets by late 2026, according to Bloomberg. Coconuts grow best in tropical climates with plenty of sunshine and rain. Image: Pixabay/Representational Indonesia, the second-largest supplier, contributes 28 per cent, followed by India at 13 per cent. The rest of the supply comes from about a dozen other tropical nations, including Vietnam, Bangladesh, Sri Lanka, Mexico and Ivory Coast. Due to poor weather in 2023 and 2024, global production is expected to fall to 3.6 million metric tons in 2024-25, a drop of nearly 10 per cent from the previous season. Early estimates suggest that production will likely remain low in 2025-26 as well. Are chocolates adding to the problem? To cut costs and protect profit margins, more chocolate manufacturers are replacing cocoa with cheaper alternatives like coconut oil. Even at current high prices, coconut oil remains more affordable than cocoa. It is a common substitute for cocoa butter, especially in vegan and dairy-free chocolates. This growing shift in the chocolate industry is adding further demand pressure to an already strained coconut oil supply. STORY CONTINUES BELOW THIS AD
Yahoo
30-05-2025
- Business
- Yahoo
India's Oil Demand Growth Could Disappoint Market Bulls
India is overtaking China as the world's biggest oil demand growth driver in a momentous shift in the oil market where China dominated growth in the past two and a half decades. While India's growth rate is ahead of China's, Indian volumes aren't anywhere near the Chinese boom in consumption that began in the early 2000s. And they never will be. With the pace of Chinese growth decelerating and India's accelerating, market bulls are correct to expect that India will lead demand growth numbers. But they could be disappointed that Indian demand growth isn't soaring at a pace similar to China's. In the period 2000-2025, Chinese demand growth averaged 485,000 barrels a day (bpd), as pointed out by Bloomberg Opinion columnist Javier Blas. India's total oil demand is about 6 million bpd at present, and it is growing at around 200,000 bpd every year. This is less than half of China's booming annual demand growth in the 2000s and the COVID slump in demand everywhere, India's oil consumption growth has settled at about 150,000 bpd to 200,000 bpd each year. It's expected to continue at around these levels, forecasters say. China, for its part, faces major structural shifts in its economy and transportation sector, with slower GDP growth, a weak property market, and booming electric vehicle sales and sales of trucks running on LNG that are displacing part of the gasoline and diesel consumption. India surpassing China as the world's top driver of oil demand growth isn't surprising at all. The surprise, if any, came from the fact that this is happening a bit earlier than many forecasters had expected a year or two key to looking at this shift is to see that China's oil demand growth is slowing while India's isn't soaring. Indian demand is rising, but not anywhere close to the Chinese boom of the past two decades. So, those who expect India to be the 'next China' could be in for a demand growth in China will be just 1.5% this year compared to 2024, according to OPEC's latest Monthly Oil Market Report. India's demand will grow by 3.4%-- so the growth in India is higher than in China. But China is expected to consume more than 16 million bpd of oil this year, compared to India's 6 million bpd. In India, oil demand in March was slightly lower than in the same month last year, OPEC said in its report. Definitely not an estimate oil bulls, Saudi Aramco, or other oil companies wanted to hear. Diesel and other transportation fuels will support India's oil product demand, which is expected to grow by 188,000 bpd this year from 2024 to average 5.7 million bpd, OPEC said in its report in May. Next year, oil demand is projected to grow by 246,000 bpd year-over-year to average 6.0 million bpd, 'supported by robust economic growth amid healthy transportation and manufacturing activities,' the cartel noted. This should be good news about Indian demand growth, considering the volatile U.S. trade and tariff policy, which could quickly dampen economic and market sentiment several times by the end of this year alone. But 246,000-bpd annual growth in India next year would compare to China's nearly 500,000-bpd growth in each of the years 2000 through 2025, with the exception of a couple of crises with the global financial crisis and COVID. Now China's consumption of transportation fuels has peaked, many forecasters and state giant China National Petroleum Corporation (CNPC) say. Some of the weakness in Chinese oil demand growth has been attributed to China's weaker economic performance over the past year. But the shift toward EVs and LNG trucks is removing some road fuel demand permanently, analysts say. India could see an acceleration of oil demand growth in the next decade as incomes rise and consumers spend more on consumer goods. India will be the fastest-growing oil demand region among large economies, Nikhil Bhandari, Co-head of APAC Natural Resource & Clean Energy Research at Goldman Sachs, told CNBC earlier this week. Income growth and rising manufacturing will result in India accounting for a third of global oil demand growth over the next decade, Bhandari said. As a rule of thumb, at a certain level of income growth, there is acceleration of oil demand as consumers buy more consumer goods apart from staples, the expert noted. And India is currently at an inflection point of income growth, which would accelerate oil demand growth over the next decade, according to Goldman Sachs's Bhandari. Although India's growth in percentage terms exceeds China's growth pace, China still consumes significantly more oil—around triple the total amount India uses. And when the biggest oil importer in the world, China, begins to see slowing growth, India isn't able to offset the slowdown or replicate the boom in demand. By Tsvetana Paraskova for More Top Reads From this article on
