War in West Asia: The US-Israeli attack on Iran puts more than oil prices on India’s radar of risks to track
The American-Israeli attack on Iran raises a number of vital questions for India and the rest of the world, delving into which is necessary to make the best of a bad situation. The prices of oil and liquefied natural gas have begun to rise as Iran attempts to choke the Strait of Hormuz, through which about one in every fourth barrel of all seaborne crude oil moves. If this grip lasts, it will make energy imports dearer, weaken the rupee and give inflation a cost-push.
India’s central bank would need to keep knock-on effects under watch; likewise, at another level, the volume and direction of capital flows. For now, stockpiles of oil are in focus. If tankers that carry almost a fifth of the world’s daily usage cannot exit the Gulf, import-reliant countries could soon run acutely short.
The US and China have large reserves. Our strategic storage would easily help us tide over more than a week; plus oil companies have stocks too. Still, we may need to resume shipments from Black Sea ports if US and Venezuelan supplies cannot fill our gaps.
Since high fuel costs would not suit US President Donald Trump as mid-term polls approach, his political interest lies in shrugging off the use of Russian oil to plug shortfalls. But then, Iran would need to ship oil out of the Gulf too, so its retaliatory blockade may be short-lived. As with any war, lose-lose dynamics now risk setting in.
Read on livemint.com