Iran US conflict: The impact of the ban imposed by America on maritime trade related to Iran will not be limited to crude oil only for India. This whole matter is going to create pressure for India at many levels. Especially at a time when crude oil prices are already above $100 per barrel. Let us know, what impact is the worsening situation between America and Iran going to have on India?

Concern for India on many fronts

The ongoing tension in the Middle East has increased the risk of disruption in the supply of LNG. The impact on LPG imports and the continuous increase in shipping costs are raising concerns.

The country is largely dependent on the Gulf countries for its energy needs. Talking about the main concern, rising costs and decreasing supply may have an impact on the Indian economy. There is a possibility of pressure on domestic fuel supply and rupee.

Why is this route important for India

1. India’s dependence on the Strait of Hormuz is very high. Especially on the import of crude oil, because almost half of the country’s crude comes through this route. Due to the stressful environment, freight and insurance costs increase. There is also delay in delivery.

That means overall landed cost of crude oil increases. Which can have a direct impact on the prices of petrol and diesel.

2. The country is heavily dependent on this route to meet its LPG needs. India meets about 60 percent of its demand through imports and about 90 percent of these imports pass through the Strait of Hormuz.

In such a situation, any kind of stress can directly affect the home kitchen. There is a possibility of increase in LPG prices and increase in subsidy burden on the government.

3. Its impact is not going to be limited to just one sector. Increase in transport expenses, agriculture and fertilizer related sectors, chemical and manufacturing industries as well as prices of FMCG products may increase. The effect of this pressure is going to reach the household budget of common people directly through the market.

Worsening situation between America and Iran

America has imposed a blockade on the sea routes connected to Iran. After which there has been a breakdown in talks between the two countries. This step will have a direct impact on the ships connected to Iran’s ports. However, ships going to places other than Iran have been allowed to move. This tension between the two countries continues at a time when global markets are under pressure.

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