Impact of Israel-Iran Conflict on Crude Oil Prices
The ongoing conflict between Israel and Iran has significantly impacted international crude oil prices, with expectations of further escalation exacerbating concerns over global oil supplies.
Implications for India
- Energy Security: Over 85% of India's crude oil requirements are imported, thus making the nation vulnerable to fluctuations in global oil prices.
- Diversified Import Sources: India has mitigated some risks by expanding its crude oil import sources.
Trends in India's Crude Oil Imports
- Decline in Import Share: Since April 2018, the share of crude oil in India's total import value has declined over seven years, despite some fluctuations.
- Price Parity with Global Averages: For seven years since FY19, Indian crude oil prices have been aligned with global averages.
Shifts in Import Partners
- Increase in Russian Imports: Following international sanctions on Russia due to its conflict with Ukraine, Russia began offering crude oil at discounted prices, leading to a rise in its share of India's imports.
- Decrease from West Asia: Correspondingly, the proportion of crude oil imports from West Asia has decreased.
