Oil shipments through the Strait of Hormuz began to recover late last week after the US and Iran agreed to a ceasefire. However, the ceasefire remains fragile, with Iranian authorities accusing Israel of violating the agreement, raising concerns about the sustainability of the reopening.
According to Sumit Ritolia, Senior Manager – Modeling at Kpler, the reopening of Hormuz is expected to provide the fastest relief to India’s LPG supplies, while crude oil and LNG imports are likely to normalize more gradually as the country has already adjusted to months of disruption through diversification and alternative supply routes, PTI reported.
The impact of the outage varied across fuels, with LPG emerging as the most affected commodity, while crude and LNG imports remained relatively resilient due to alternative sources 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 affected,” he added.
He said the recovery is likely to be sequential, with LPG flows normalizing first, followed by LNG and crude oil.
“In our base case of a gradual reopening from early July, the initial focus will be on clearing stranded cargo and restoring shipping flows before Gulf exporters can materially increase exports,” Ritolia said.
India imports about 88 percent of its crude oil needs, nearly half of its natural gas needs, and about 65 percent of its LPG consumption.
Before the crisis, the Gulf region supplied roughly half of India’s crude imports, two-thirds of its LNG demand and nearly 90 percent of its LPG imports.
