- Escalating Iran-US-Israel tensions threaten the Strait of Hormuz, a vital energy corridor, creating risks for India’s oil and gas supply and prices.
About the Strait of Hormuz
- Strait of Hormuz lies between Iran (north) and Oman’s Musandam Peninsula (south), linking the Persian Gulf to the Gulf of Oman and the Arabian Sea.
- It is the world’s most critical energy chokepoint and the sole maritime exit for the Persian Gulf.
- Energy Transit: Nearly 20% of global oil supply and one-fifth of global LNG trade (mainly from Qatar) pass through it.
- Fertiliser Trade: Around one-third of global fertiliser exports transit this route.
- Alternative Routes: Saudi Arabia’s East–West Pipeline and the UAE’s Fujairah Pipeline provide the only bypass options.
- Capacity Gap: Their combined unused capacity of 2.6 million bpd can offset only 13% of the total Hormuz oil transit.
Primary Causes of Strait Crisis
- Military Strikes: Israel and the US attacks on Iran escalated regional tensions, prompting Tehran to threaten Gulf oil transit routes.
- Geopolitical Retaliation: Iran’s response to Western actions, including warnings from the Iranian Revolutionary Guard Corps (IRGC), disrupted vessel movements and raised supply risks.
- Supply Vulnerability: Heavy dependence on the Strait of Hormuz for crude, LPG, and LNG imports exposed global and Indian energy flows to potential disruption.
India’s Dependence on the Strait of Hormuz
- Crude Oil: About 50% of India’s crude imports, nearly 2.5 million barrels per day, transit the Strait of Hormuz.
- India is the third-largest crude consumer globally, with an import dependency of over 88%.
- LPG Imports: Around 80–85% of India’s LPG comes via the Strait, with minimal strategic reserves.
- LNG Imports: About 60% of LNG imports rely on this route; structural buffers are lacking.
- Strategic Petroleum Reserves: India maintains ~10 days of crude stocks and ~1 week of fuel stocks, which can mitigate short-term shocks.
Implications for India’s Energy Security
- Crude Risk: Half of India’s crude imports (2.5–2.7 million bpd) transit the Strait of Hormuz, threatening supply continuity.
- Price Volatility: Brent crude spiked above $82/barrel. E.g., even a $1 rise increases India’s annual import bill by $1.8–2 billion.
- Short-Term Shock: With only one week of LPG stocks and minimal LNG reserves, India faces high vulnerability to supply disruptions from the Strait of Hormuz.
- Price Volatility: Any disruption could spike global energy prices, impacting India’s 88% oil import dependency and fuel affordability.
Strategic Safeguards for India’s Energy Security
- Strategic Reserves: India’s Strategic Petroleum Reserve, with a capacity of 5.33 million tonnes, provides about 9.5 days of net import cover.
- Total Cover: Combined with commercial stocks, India’s total crude oil cover stands at roughly 75 days, below the IEA-recommended 90-day buffer.
- Russia Pivot: India can absorb discounted Russian crude delivered via sea routes that entirely bypass the Strait of Hormuz.
- Source Diversification: Spot purchases from the USA, West Africa, and Latin America can offset disrupted Gulf supplies.
- Pipeline Access: Commercial arrangements can allow access to Saudi Arabia’s East-West Pipeline and the UAE’s Fujairah Pipeline.
- Naval Security: The Indian Navy maintains escort operations in the Gulf of Oman under Operation Sankalp to protect Indian-flagged vessels.
“Energy security is national security.” India’s reliance on Hormuz poses risks, but reserves, diversification, and naval safeguards ensure resilience against short-term disruptions.
Reference: The Indian Express
PMF IAS Pathfinder for Mains – Question 574
Q. The Strait of Hormuz is a vital gateway for India’s crude oil and LNG imports. Analyse the implications of disruptions for India’s energy security and economic stability. Suggest measures to mitigate these risks. (250 Words) (15 Marks)
Approach
- Introduction: Write a brief introduction about the Strait of Hormuz and its importance for India.
- Body: Write the importance of the Strait of Hormuz for India’s crude oil and LNG imports, implications of disruptions for India’s energy security, and suggest measures to mitigate these risks.
- Conclusion: Emphasis on the storage and diversified import approach to ensure supply continuity and economic stability.
