Israel-Iran War: No Cause For Alarm Over Crude Oil Supplies At Present, Say Indian Govt Sources
The market is experiencing an oversupply, with no imminent risk of shortage, the sources added
There is no cause for alarm regarding the global crude oil supply at present amid the Israel-Iran conflict and tensions in West Asia, Indian government sources told CNN-News18 on Tuesday. The market is experiencing an oversupply, with no imminent risk of shortage, they added.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are producing approximately 120 million barrels per day. However, production has been slightly reduced by 5 million barrels, bringing the current production level to roughly 97 million barrels per day. Additionally, countries in the Western Hemisphere, such as Guyana, Brazil, and the United States, have become significant oil suppliers, contributing to the increasing global supply.
The supply chains remain uninterrupted through key maritime routes, including the strategically vital Strait of Hormuz. Despite ongoing geopolitical dynamics, such as those involving Iran and China, the global oil supply chains continue to function efficiently. For India, which consumes 5.6 million barrels of oil per day, only 1.5 to 2 million barrels are transported through the Strait of Hormuz, indicating a reduced dependency on this route.
India has successfully diversified its oil sources, increasing from 27 countries previously to 40 countries currently. This diversification strategy has enhanced the nation's energy security. In terms of strategic reserves, India maintains ample stock, ensuring that alternative sources can be tapped in case of a supply disruption. For liquefied petroleum gas (LPG), 50% of the demand is met domestically, and stock levels are adequate to meet current requirements.
In terms of export controls, India has the capability to halt oil exports if necessary to prioritise domestic availability. The government conducts daily review meetings to monitor the situation closely and ensure proactive responses to any changes. Among India's crude imports, 38% come from Russia. Furthermore, the Oil and Natural Gas Corporation (ONGC) has drilled 500 wells, providing India with access to reserves amounting to 42 billion barrels.
Regarding the price outlook, while marginal increases in freight and insurance costs may occur, the market has largely already factored in these changes. The overall situation appears stable, with sufficient measures in place to manage any potential disruptions effectively.
India is closely monitoring the Iran-Israel conflict to assess its impact on crude oil and gas supply, government sources said. Officials at the petroleum and natural gas ministry are evaluating the potential effects of escalating tensions between Iran and Israel on India's oil supply. Government sources have stated that due to India's diversified energy sources and its reliance on countries in the Western Hemisphere, the nation is prepared for any potential shortages. It has reserves in place for several weeks.
India will consider increasing supply from alternative energy sources, including those from West African nations, to ensure fuel supply security in case Iran blocks the Strait of Hormuz. Sources have indicated that there is an ample supply of crude oil coming to the market, so there is no shortage. India is receiving oil from Brazil, Guyana, Canada, the US, and other countries as well.
Up until 2025, the Strait of Hormuz has never been completely closed. Only a third of India's oil supply comes through this route. India is also factoring in increased freight corridor charges and a rise in pricing. Senior oil ministry officials and industry leaders are conducting scenario analyses and preparing contingency plans for potential supply disruptions and price volatility, said sources.
The oil ministry reports that India maintains crude oil and petroleum product storage facilities capable of meeting 74 days of domestic consumption requirements. The strategic petroleum reserves account for 9.5 days of this total capacity.
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First Published:
June 17, 2025, 17:36 IST
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