Oil shipments through the Strait of Hormuz began recovering late last week after the US and Iran agreed to a ceasefire. However, the truce remains fragile, with Iranian authorities accusing Israel of violating the agreement, raising concerns over the durability of the reopening.
According to Sumit Ritolia, Senior Manager – Modelling at Kpler, the reopening of Hormuz is expected to provide the quickest relief to India’s LPG supplies, while crude oil and LNG imports are likely to normalise more gradually as the country has already adjusted to months of disruption through diversification and alternative supply routes, PTI reported.
The impact of the disruption varied across fuels, with LPG emerging as the most affected commodity, while crude and LNG imports remained relatively resilient due to alternative sourcing and bypass infrastructure.
Ritolia said, “A reopening of the Strait of Hormuz (SoH) would represent a major milestone for global energy markets, but the impact on India is likely to vary significantly across commodities.”
“While India remains one of the largest importers of Middle Eastern hydrocarbons (crude, LPG, and LNG), crude and LNG imports have proven relatively resilient throughout the disruption, unlike LPG, which has been the most severely affected,” he added.
He said the recovery would likely be sequential, with LPG flows normalising first, followed by LNG and crude.
“Under our base case of a gradual reopening from early July, the initial focus will be on clearing trapped cargoes and restoring shipping flows before Gulf exporters can materially increase exports,” Ritolia said.
India imports about 88 per cent of its crude oil requirements, nearly half of its natural gas needs and around 65 per cent of its LPG consumption.
Before the crisis, the Gulf region supplied roughly half of India’s crude imports, two-thirds of its LNG requirement and nearly 90 per cent of LPG imports.