After Iran and the US-Israeli conflict intensified, India achieved a diplomatic breakthrough. On Saturday two Indian-flag gas carriers – Which are trapped near the United Arab Emirates – are “looking to” go through the high-traffic, high-stakes Straits of Hormuz.
If/when this happens, it is a “ray of hope” for India’s energy security since the closure of this maritime corridor has virtually paralysed the supply of LPG for maximum consumption in a vast number of Indian homes — due to the numerous threats of military action.
The choke point: The importance of the Strait of Hormuz to your kitchen
The Strait of Hormuz is the single most important oil “artery” in the world for oil flow. It is a narrow body of water, which separates Iran from Oman, and is the only way for sea-borne exports from the United Arab Emirates, Kuwait, Saudi Arabia, and Iraq to pass out.
Almost twenty percent (20%) of the total volume of oil and gas produced in the world transits through the strait. Any extended closure of the Strait of Hormuz will not only drive up the cost of petrol in India, but will also have a direct impact on the supply and availability of liquefied petroleum gas (LPG) that fuels millions of households across India.
The stand-off: 22 Indian-flagged vessels caught in the crossfire
Iran warned any vessel attempting to transit through the Strait of Hormuz would be attacked, resulting in a complete shutdown of all global/maritime vessel traffic in the strait. Following the shutdown of all vessel traffic have been the last 48 days of all maritime activity… with no indication that this global/maritime traffic will resume in the near-term.
At this moment, 22 Indian boats are trapped in the Gulf and cannot proceed or return. Two specific tankers that have brought intense diplomatic efforts to bear on their behalf are:
Pine gas: Chartered by Indian Oil Corporation Limited (IOC).
Jag Vasant: Chartered by Bharat Petroleum Corporation Limited (BPCL).
Both are heavy LPG carriers delivering much-needed fuel to the Indian market and remain parked near Sharjah, United Arab Emirates, while they await a “safe window” to sail.
PM Modi’s energy diplomacy in action
The government of India has moved into high gear in an effort to avert a domestic fuel crisis; Mr Modi is speaking directly with world leaders to guarantee the “safe and uninterrupted” passage of Indian vessels.
India’s unique diplomatic positioning — maintaining stable relations with Tehran and managing its position within the larger US/Israeli alliance — is providing a strategic advantage toward achieving this goal. Last week there are reports of Iran allowing two Indian LPG tankers passage as a goodwill gesture. India has preserved its ability to keep a narrow channel of communication open with Iranian authorities by taking no definitive stance on the ongoing hostilities.
Pakistan factor and selective access
There is a “Pakistan factor” at play in the selectivity of access to the Strait of Hormuz; recently, a tanker heading for Pakistan was able to pass through the strait without any incidents. Some experts believe that Iran is using this waterway as a pressure tool by selectively allowing certain countries, those with whom the country has an active relationship, to pass through and blocking others in order to show how much control Iran has over the world’s energy markets.
What this means for the common man
This is not a story about boats or sailors; it is about your car’s fuel and the gas that goes in your stove. If the Strait of Hormuz were blocked for a long period of time, then India could experience:
Fuel shortages – Delays in the delivery of LPG and crude oil
Price increases – An increase in global oil prices will likely yield immediate inflation
Economic strain – Transportation and basic goods will become more expensive
As the Jag Vasant and Pine Gas prepare to leave port on Saturday, those watching the Indian energy market are looking out toward the horizon, praying for a smooth passage so that India’s kitchens continue to function.
