Will Iran Grant Safe-Transit To Indian Oil Tankers Via Strait Of Hormuz?

Amid the ongoing Middle East crisis, India is in talks with Iran to secure a safe transit for over 20 tankers from the Strait of Hormuz.

Foreign Ministers of both nations have deliberated over this in the recent period with the latest one prioritising "issues pertaining to the safety of shipping and India's energy security".

The pertinent maritime trade choke point, which is crucial for the transit of nearly a fifth of the world's crude oil, has been effectively closed since the beginning of the West Asia conflict.

Randhir Jaiswal, Spokesperson for Ministry of External Affairs, noted that Minister of External Affairs, S. Jaishankar, has spoken three times in recent days with his Iranian counterpart, Abbas Araghchi.

Meanwhile, the Union Petroleum Minister Hardeep Singh Puri, claimed that there was no shortage of kerosene, petrol, diesel, or LPG in the country.

"Procurement has now been actively diversified, with cargoes being secured from the United States, Norway, Canada, Algeria and Russia. Hence, in the last five days, LPG production has been increased by 28% through refinery directives, and further procurement is currently underway," he said.

Also Read: If Oil Prices Hit $200/BBL: What Will It Mean For India's GDP Forecast?

Further, he noted that "the non-subsidised consumer price stands at Rs 913 following the recent Rs 60 adjustment, against a market-determined price of approximately Rs 987."

"Equivalent LPG prices in the neighbourhood stand at Rs 1,046 in Pakistan, Rs 1,242 in Sri Lanka, and Rs 1,208 in Nepal. OMC compensation of Rs 30,000 crore has been approved against losses of approximately Rs 40,000 crore in 2024-25," he stated.

Energy Shock: India's Exposure To Strait Of Hormuz Crisis 

Every USD 1 increase in crude raises India's annual import bill by approximately USD 2bn. Prolonged tensions may increase logistics and marine insurance costs, disrupt Gulf shipping routes and pressure the trade balance, according to a brokerage note.

"INR faces near-term depreciation bias, with potential RBI intervention through FX reserves. The transmission channel is clear: higher crude increases inflation risk; higher inflation pushes bond yields up; rising yields compress equity multiples," as per JM Financial.