Strait of Hormuz Crisis: Is a $100 Per Barrel Oil Price About to Hammer India’s Economy?

As West Asia teeters and crude prices are creeping upwards, energy specialists have sounded a stark warning—India's actual threat isn't oil supply; it is the price. In the event of global crude prices breaching $100 per barrel, India's economy would suffer.

In the wake of the American attack on Iran and escalating tensions in the Gulf, anxieties are growing about the future of oil trade through the Strait of Hormuz, a strategic waterway that carries almost 25% of the world's crude oil and large volumes of LNG. Though the oil continues to flow, the specter of disruption hangs over it, and with that the risk of a price hike that would shake India's economic stability.

MK Surana, ex-chairman of HPCL, stated, "India has intelligently diversified sources of supply, so immediate availability is not the problem. But any disruption in the Strait or neighboring oil installations will drive crude prices higher—and for India, price is the genuine concern." He further added that in case of escalation, crude may rise well above the $80 point, with possible spikes on breaking news.

 

Famed energy analyst Narendra Taneja seconded this, stating, "In history, the Strait of Hormuz was never shut. If Iran tries to do this, it would provoke U.S. military action and international retribution. But if it is done, oil prices could reach $150 a barrel, hurting India badly."
India is dependent on the region—almost 39% of its crude shipments and two-thirds of its crude imports go via the Hormuz route. Economist Madan Sabnavis cautioned that if crude continues above $100 for a sustained period, India might experience a 25% increase in terms of base price assumptions, which would result in increased inflation and lower consumption.

Ajay Srivastava of GTRI stressed, "Closure of the Strait would swell India's oil import bill, aggravate inflation, and strain the fiscal situation. India is vulnerable in the sense that it is reliant on this single route.

Meanwhile, Petroleum Minister Hardeep Singh Puri assured the public that India is prepared. “We import 4 million barrels through alternate routes. Our oil companies have reserves of up to 25 days. We’re in touch with all key players.”
Still, markets remain on edge. If tensions escalate and crude breaches the $100 mark, the pressure on India's economy—from inflation to forex and fiscal metrics—could become unsustainable.

While the Middle East ticks, the world oil market takes note. India worries not if there will be an effect—but how severe if the Strait closes or prices rocket.

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