India Confident Amid Rising Oil Prices Due to Middle East Conflict: Hardeep Singh Puri

After the Iranian missile attack, it is being speculated that Israel may target oil or nuclear facilities in Iran. And Tehran can choose to respond with either direct attack on Israel or shutting the Strait of Hormuz - the world's most important oil transit point, further flaring oil prices.

International oil prices have flared to over $78 per barrel from about $70 per barrel, as the market waited to see if Israel would retaliate against Iran for a missile attack last week. But supplies are not impacted and India, the world's third largest oil consuming and importing nation, is confident of being able to navigate any situation.

“There is no shortage of oil and India is confident of sourcing its requirement. I am confident we will be able to navigate as we did previously,” the minister said.

The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. A fifth of global oil flows from the Strait. Oil from all major oil producers - Saudi Arabia, Iraq, Kuwait and UAE - is exported via the Strait. Only Saudi Arabia and the United Arab Emirates (UAE) have operating pipelines that can circumvent the Strait of Hormuz.

Prior to the spike last year - the most since January 2023, there were hopes of a cut in petrol and diesel prices. The price of a basket of crude oil India imports had averaged $73.69 per barrel prior to in September, down from about $83-84 a barrel in March when petrol and diesel prices were last cut by Rs 2 per litre. But the surge has now almost dashed such hopes.

Asked about the possibility of the reduction, Mr Puri said petrol and diesel are deregulated commodities and oil firms take pricing decisions. “Keep your fingers and toes crossed,” he said adding, “We will monitor the situation carefully as we go forward.”

Before the surge of last week, rating agency Icra had stated that there was a headroom to cut petrol and diesel prices by Rs 2-3 a litre. This was based on a decline in the price of crude oil -- which is converted into fuels like petrol and diesel at refineries -- had rekindled hopes for a reduction in petrol and diesel rates that have been on a freeze for over two years now barring a pre-election reduction in March.

While petrol and diesel pricing is deregulated, the state-owned fuel retailers, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), have rarely used this freedom since late 2021 by not revising prices in line with cost. They stopped daily price revision in early November 2021, when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had effected during the pandemic to take advantage of low oil prices.