Will Israel-Iran Conflict Impact India's Oil Reserves? What Minister Said

NDTV

8 hours ago

New Delhi:
The conflict between Israel and Iran has reached an unprecedented level, with verbal threats and aerial engagement with ballistic, cruise missiles, and drones. The 2025 conflict is the third direct engagement between the two arch-rivals and the most expansive.
Oil - A vital natural resource found and produced in abundance in the Middle East is facing a direct impact from the conflict, with a fear of shortage. India's Petroleum and Natural Gas Minister, Hardeep Singh Puri, has assured that there is "No reason to worry about energy count and we have sufficient energy reserves to last for weeks."
'India's Diversified Sources'
In an exclusive interview with NDTV, Mr Puri spoke about India's oil reserves and whether the country will face an immediate impact due to the ongoing battle between Iran and Israel. The minister said, "We are constantly monitoring the situation. No reason to worry about energy count. India has sufficient energy reserves to last for weeks."
Mr Puri said India has strategically diversified its energy sources and the "global oil supply is much more than ever," adding that "we are monitoring the prices."
"For a country dependent over 85% or 85% on crude oil imports for its requirements, yes, the situation as it unfolds globally will impact us, without a doubt. A country that depends 50% on imports for its natural gas requirements will be equally impacted, but having said that, let me say two things. Firstly, there is more oil available on the global market than at any point in research history. Production, new producers are coming to the market. I am not referring just to Guyana. It still has to come on stream, but a big find has been made. More suppliers in the western hemisphere," he said.
"The United States is the largest producer, with 13 million barrels produced per day. They are going to add another 1.5 million barrels. Canada, Brazil, etc. So there is more oil coming to the market," he added.
India is getting oil from Brazil, Guyana, Canada, the US and others too.
Strait Of Hormuz
Speculations over an Iranian blockade of the Strait of Hormuz continue, especially after a former Iranian minister suggested oil tankers and LNG shipments passing through the Strait should go only with Tehran's authorisation.
Mr Puri responded and said, "India has options even if Iran seals the Strait of Hormuz." The Strait lies between Oman and Iran and links the Gulf north of it with the Gulf of Oman to the south and the Arabian Sea beyond.
Whether the change in oil prices impacts consumers, Mr Puri said, "On the price side, the Prime Minister has already demonstrated that if a government is conscious of the needs of its consumers, on three occasions, he has brought the central excise down. I am talking about November 2021, May 2022, and March 2024. The central government reduced its excise, and the BJP states also reduced their VAT...As a result of the central government's action, the price came down by Rs 13 and Rs 16, respectively, for petrol and diesel...If tensions escalate, will the route be closed, the Straits of Hormuz? Frankly, people agonise about that. But as far as I am aware, in the last 50 years of our history, of the history of this region, the Strait of Hormuz has never been closed."
Only one-third of India's oil supply comes from it. Around 38% of India's oil imports come from Russia at roughly 5.6 million barrels a day, and only 1.2 million barrels come through the Strait of Hormuz.
The minister said that if the supply from the Strait of Hormuz is impacted, then "India will increase its domestic production, and will not export," adding that it will "also buy from other sources."
Mr Puri said the US President has repeatedly said "Drill baby, drill"; he is keen on increasing production to bring oil prices down. The US would not want the strait to be closed; it's not even in China's interest, either.
About a fifth of the world's total oil consumption passes through the strait. Between the start of 2022 and last month, roughly 17.8 million to 20.8 million barrels of crude, condensate and fuels flowed through the strait daily, according to data from Vortexa.
OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia. The UAE and Saudi Arabia have sought to find other routes to bypass the strait. Iran has threatened over the years to block the strait but has never followed through.
Mr Puri explained that the insurance price is going up, which means there will be some additional cost.
"In India, 67 million people go to the petrol station for different forms of energy: petrol, diesel, CNG. It's the cost of production of a barrel outside, the cost of freight. Yes, it stands to reason that if any supply route is closed and you have to re-route your supplies, then the cost of freight would go up. The cost of insurance has gone up because insurance companies would like to cover their risk. So far, merchant shipping has not been hit," Mr Puri said.