India will be able to overcome any oil supply shock that may result from the possible widening of the conflict in the Middle East, Oil Minister Hardeep Singh Puri said on Tuesday.
International oil prices have soared to around $79 a barrel from around $70 a barrel in just over a week, as the market waited to see whether Israel would retaliate against Iran for the Oct. 1 missile attack. .
“There is no reason to panic,” Puri said. “There is more than enough oil available in the world.”
While India, the world’s third-largest oil importing and consuming country, is more than 85 per cent dependent on imports to meet its crude oil needs, the situation is “manageable”, he said. “There is no need to worry.”
“We’re pretty confident we’ll be able to navigate like we have in the past,” he said.
This is mainly because the market is flooded with oil supplies and if some parties slow down production or there are supply issues, there are new suppliers in the market to fill the gap.
“More than enough oil is coming to the market,” he told the Financial Times India Energy Transition Summit.
After the Iranian missile attack, there is speculation that Israel could attack oil or nuclear facilities in Iran. And Tehran may choose to respond with a direct attack on Israel or by closing the Strait of Hormuz, the world’s most important oil transit point, which would send oil prices even higher.
The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. A fifth of the world’s oil flows through the Strait. Oil from major oil producers (Saudi Arabia, Iraq, Kuwait and the United Arab Emirates) is exported across the Strait.
Only Saudi Arabia and the United Arab Emirates (UAE) have operational pipelines that can bypass the Strait of Hormuz.
Before last week’s rally, the biggest since January 2023, there were hopes of a cut in gasoline and diesel prices. The price of a basket of crude oil that India imports had averaged $73.69 a barrel in September, down from around $83-84 a barrel in March, when gasoline and diesel prices were last cut in 2 rupees per litre.
But the surge has all but dashed those hopes.
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