Analysts say that India is most at risk from prolonged disruptions in Mideast oil supply.
Analysts said that India, as a rapidly growing oil consumer, would be the most vulnerable country to a 'crude supply shock' if the Middle East conflict led to a long-term disruption of shipments out of the region. This is mainly due to its thin reserves.
China and India are Asia's two largest energy consumers. They import around half their crude oil from the Middle East. However, India has less crude in its storage than China, and it is now more dependent on Middle East crude than the past three years.
"China has enough crude oil to last at least six months in its storage." Indian inventories, however, are lower, making it more vulnerable to this situation, according to AjayParmar, director of energy & refining for ICIS, an commodities research group. The risk to two of Asia's leading economies is a reflection of the wide-ranging consequences of Israeli and U.S. attacks on Iran. These strikes have triggered regional conflict, effectively closing the Strait of Hormuz – a major bottleneck that a fifth of world oil shipments pass through. The price of global benchmark Brent crude jumped 7% on Sunday, and an extended war could push fuel prices even higher. In January, India imported about 2.74 millions barrels of crude oil per day from the Middle East. This is the highest level since late 2022 when the refiners of India reduced their consumption of Russian oil in response to pressure from Washington.
Last month, Hardeep Singh Puri, the Oil Minister of India, told lawmakers that India could store enough crude and fuel for 74 days. According to refining sources, India's current inventories only cover 20-25 days.
UNCLEAR -?Options
India could be forced to look for oil in other countries if the situation worsens. In a Monday post on X, the federal oil minister said that India would take all steps necessary to ensure fuel was available at affordable prices. The White House and Office of Foreign Assets Control didn't immediately respond to questions about whether or not the U.S. could assure India that it can resume buying Russian crude oil without reimposing 25% U.S. import tariffs.
Marco Rubio, Secretary of State, said that the Departments of Treasury and Energy will announce actions on Tuesday in order to "mitigate" rising energy prices.
Asia purchases close to 90% Middle East oil exports. Japan and South Korea get 95% and 30% of their oil respectively from the Middle East. However, both countries have larger inventory buffers than India or China. Japan's oil reserves are equal to 254 days' worth of consumption. A South Korean official stated on Monday that the country has enough stockpiles to last 208 days.
BROADER GLOBAL RISKS
Analysts said that although Europe and the United States don't buy much Middle East crude oil, they would suffer if the Strait of Hormuz was closed for a long time. This would result in higher prices globally.
Parmar said that if the Strait was closed for a long time due to a war, all countries would be competing for each additional barrel of oil.
Matt Smith, a Kpler analyst, says that Europe may have some difficulty accessing jet-fuel, since the Mideast Gulf accounts for "around 45%?of (Europe's waterborne jet-fuel imports".
Since the United States became the largest oil and natural gas producer in the world, it has cut its Middle East oil exports. According to U.S. statistics, the United States bought less than 900,00 bpd of oil from Gulf countries last year. According to an official in Washington, Washington is not discussing the release of U.S. Strategic Petroleum Reserve at this time. However, past administrations did tap into the stockpile when war was raging.
(source: Reuters)
