Petroleum and Natural Gas Minister Hardeep Singh Puri on Sunday allayed fears over any disruption in oil supplies to Indian consumers due to the Israel-Iran war and further escalation in geopolitical tensions in the Middle East because of the US bombing of Iran’s nuclear sites.
“We have been closely monitoring the evolving geopolitical situation in the Middle East since the past two weeks. Under the leadership of Prime Minister Narendra Modi, we have diversified our supplies in the past few years, and a large volume of our supplies does not come through the Strait of Hormuz now,” the minister said.
He pointed out that the country’s oil marketing companies (Indian Oil, Bharat Petroleum and Hindustan Petroleum) have supplies for several weeks and continue to receive energy supplies from several routes.
“We will take all necessary steps to ensure the stability of supplies of fuel to our citizens,” the minister assured.
Iran is situated on the northern side of the Strait of Hormuz/Persian Gulf, through which 20 million barrels of oil per day flow from major exporting countries such as Saudi Arabia and the UAE. Iran had threatened to block this route if the US intervened in the conflict with Israel.
A wider Middle East conflict is expected to have an impact on oil supplies from Saudi Arabia, Iraq, Kuwait and the UAE, which would lead to a sharp spike in oil prices. Shipping could also get hit as Yemen’s Houthi rebels have already warned that they would resume their attacks on ships if the US attacked Iran.
India imports around 85 per cent of its crude oil requirement, and a surge in oil prices leads to an increase in its oil import bill and pushes up the rate of inflation, which hurts economic growth. The larger outgo of foreign exchange also leads to a weakening of the rupee vis-a-vis the US dollar.
However, India has diversified its oil sources by increasing imports from Russia as well as the US and building resilience through strategic reserves.
Highlighting the infrastructure milestones in the oil and gas sector, Puri had earlier said that the country now has 23 modern operational refineries with a total capacity of 257 million metric tonnes per annum to produce petroleum products.
The minister also highlighted the ministry’s initiative in setting up storage facilities for strategic petroleum reserves, on which the country can fall back in times of emergency and which assume importance during times of geopolitical uncertainty. These reserves can also be dipped into at times when global prices skyrocket to provide a cushion to the national oil companies.
The minister mentioned that the storage capacity at Pudur is 2.25 million metric tonnes (MMT), the Visakhapatnam facility has the capacity to store 1.33 MMT of crude oil, while Mangalore has a storage capacity of 1.5 MMT. Besides, another strategic reserve facility is being built at Chandikhol, which is also on the coast.
