KOLKATA (miningweekly.com) – The Indian government has expressed “serious concern” over current disturbances in the Strait of Hormuz region impacting on movement and freight costs of crude oil and liquefied natural gas (LNG) between the Middle East and India.
The government’s concern was shared with Saudi Arabia Oil Minister, Khalid al-Falih, during his brief stopover in New Delhi on Thursday.
“[I] raised my concerns about the recent increase in Asian premium, disturbances in the Strait of Hormuz impacting on the movement of crude oil and LNG tankers and the decision of OPEC Plus members to extend the production cuts leading to oil price volatility and the adverse impact of that on the Indian economy,” Indian Oil and Natural Gas Minister, Dharmendra Pradhan, said in a statement after a meeting with the Saudi Minister.
He reiterated that India faced the biggest impact of the current tension in the Strait of Hormuz as it depended on the region for its oil and gas supplies, with two-thirds of crude oil and half of LNG imports passing through the strait.
Two oil tankers passing through the strait on June 13 were damaged, with the US Administration blaming Iran for the attack. Tension mounted further when Iran seized a British flag oil tanker passing through the region, last week.
Sources said that in response to India’s concern, the Saudi Minister reportedly shared the view that China and India, two of the largest importers of crude and natural gas from the region, should come together and collaborate in securing ships passing through the sea lanes in the region that sees about one-third of global trade in oil and natural gas.
While Indian shipping lines have sought the Indian Navy’s help in securing passage through the Strait of Hormuz, the Saudis feel that a concerted security collaboration between the two largest buyers, China and India, would ensure greater security cover for shipping lines, the sources added.
Indian Navy warships have been escorting India flagged oil carriers passing through the Strait of Hormuz. Navy personnel were also boarding Indian oil carriers to offer on-board protection, against the backdrop of the seizing of a Swedish-owned, UK-flagged oil carrier by Iranian Revolutionary guards, who held the ship’s crew.
Pradhan said India had also requested Saudi Arabia to continue its leadership role in maintaining the oil market balance.
According to oil sector analysts here, freight charges have doubled for Indian oil refiners, from $150 000 a day to as much as $300 000 a day, since tensions in the Strait of Hormuz started. The analysts say marine insurers are charging additional war risk premiums ranging from 0.35% to 4%.