The intensifying conflict in West Asia has caused a new shock to the world’s energy markets, driving up crude prices dramatically, interfering with the flow of gas and oil across the Strait of Hormuz, and compelling big importers like India to strengthen their supply plans.
This week’s 24% increase in Brent crude futures is the largest since May 2020, when a record OPEC+ production cut agreement spurred a recovery from the epidemic lows. For the first time since April 2020, the US West Texas Intermediate (WTI) has risen around 30%. Brent continued its upward trend on Friday, increasing by $4.59, or 5.4%, to $90 per barrel. WTI reached $87.46, up $6.45, or 8%.
Kuwait’s decision to begin shutting down oil production at some oilfields due to a lack of storage facilities and Qatar’s energy minister’s comments that he expected all Gulf energy producers to stop exporting within weeks—a move he claimed could drive oil to $150 per barrel—were the causes of the sharp spike. In light of indications that the conflict would go on longer, New Delhi has strengthened efforts to guarantee a continuous supply of both natural gas (LNG) and oil while severely limiting imports from some of the biggest suppliers.
Following difficulties related to the conflict, QatarEnergy and Petronet LNG claimed force majeure on LNG supply, prompting officials here to say that the government is reevaluating gas allocation.
In February, Russia continued to be India’s biggest oil supplier. The energy markets are currently preparing for more turbulence. Crude prices might reach $150 per barrel if Gulf producers are compelled to halt exports for weeks as a result of the dispute, Qatar’s energy minister warned the Financial Times.
In an effort to relieve pressure on international markets, Washington allowed New Delhi a waiver to acquire crude cargoes stranded at sea. As a result, Indian refiners are also seeking legal advice on how they can buy sanctioned Russian oil. Refiners may discharge shipments that were loaded prior to the most recent limitations going into place, thanks to the waiver.
Just 0.2% of India’s oil imports came from Russia before the crisis between Russia and Ukraine; the majority came from Gulf suppliers, including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, and Qatar. India’s energy sourcing has now undergone substantial diversification.
Government data shows that 55% of India’s imports of crude oil in February came from areas beyond the Strait, demonstrating the nation’s efforts to lower supply risk from the area.
India is susceptible to long-term delays in the region since it imports about 30% of its LNG via routes that are connected to the Strait of Hormuz. According to officials, the administration is already looking for more LNG cargoes to guarantee supply stability.
While it is still open to increasing energy purchases from the US, India is also looking at importing more LNG from Australia and Papua New Guinea. According to industry analysts, as domestic gas supply stagnates and consumption rises across sectors, including city gas distribution, fertilizers, and industry, India’s reliance on imported LNG has continuously increased.
For the time being, however, the conflict in West Asia is still changing the world’s energy patterns, driving up crude prices and making big importers like India balance gas, oil, and geopolitical risk.
