Crude oil prices rose by more than 2% on Thursday due to supply constraints in the Middle East, specifically the closure of the Strait of Hormuz by Iran. The benchmark crude’s April contract on the Intercontinental Exchange was trading at $83.26 per barrel, marking a 2.43% increase from the previous close. Similarly, the April contract of West Texas Intermediate on the NYMEX surged by 2.63% to $76.63 per barrel.
Amid reports of a container ship being hit by a projectile while passing through the Strait of Hormuz, concerns over oil supply disruptions have intensified. India, a major oil importer, could face a higher import bill if oil prices continue to rise. A $1 increase in oil prices per barrel for a year could potentially raise India’s import bill by approximately Rs 16,000 crore.
India, heavily reliant on oil imports, has taken steps to secure its energy needs. With 25 days of crude oil reserve and a similar stockpile of products, including those in transit, the country is relatively well-prepared. While over 85% of India’s crude oil is imported, recent efforts to diversify sources beyond the Middle East, including Africa, Russia, and the US, have helped mitigate risks associated with disruptions in the Strait of Hormuz.
India’s strategic oil reserves and diversified import sources have bolstered its energy security, reducing dependence on Gulf countries. Despite spending $137 billion on crude oil imports in the previous financial year, recent data shows a significant expenditure of $100.4 billion on 206.3 million tonnes of crude oil imports in the first ten months of the current financial year.
