NEW DELHI: The ongoing conflict between Israel and Palestine will not create an energy issue for India, and the country will navigate through it, said Petroleum Minister Hardeep Singh Puri on Monday. However, the minister also warned that situations like these encourage countries to opt for cleaner energy use.
“Let us be absolutely clear that the place where the action (Israel and Palestine conflict) is taking place is, in many respects, the center of global energy. We are watching it very carefully. As we move forward, we will navigate through this; there's no issue. But I was merely making the point that these kinds of uncertainties only encourage people to transition towards sustainable and cleaner energy use,” said the minister,” said the minister.
Puri, while speaking on the sidelines of the Energy Technology Meet on October 9, also mentioned that India is closely monitoring the developments. He mentioned that the country will handle the situation with maturity.
Meanwhile, industry analysts believe that if the conflict spreads, there is a risk to supplies, as the Middle East region produces almost a third of the global oil supplies. According to Prashant Vashisht, Vice President and Co-Head at ICRA, the currently affected regions are not oil-producing, but this conflict is raising geopolitical risk premiums on oil, resulting in rising oil prices.
"However, if the conflict spreads, there is a risk to supplies, as the Middle East region produces almost a third of the global supplies. About 20% of the global oil supply would be impacted if the Strait of Hormuz is affected," added Vashist.
India exports petroleum products to Israel. As per the commerce ministry data, India exported petroleum products worth USD 511 million from April to July 2023.
Crude oil prices have been highly volatile over the past month due to the production cuts by major oil producers Saudi Arabia and Russia. The announcement resulted in Brent crude futures reaching as high as USD 97 per barrel before settling at USD 83 last week.
Following the conflict between Israel and Palestine, oil prices surged once again by USD 3 per barrel on Monday. On Monday, the Brent Crude Futures, a benchmark of crude price, was trading at USD 85.86 a barrel on Monday, up by 3.71% or USD 3.07 at 12:50 PM IST. Meanwhile, US WTI crude was trading at USD 87.40 a barrel, reflecting a gain of USD 2.82 or 3.33%.
Puri batted for the crude oil price to be around USD 80 per barrel or slightly lower, as this would be a convenient price range for countries. While speaking at the ADIPEC oil and gas conference in Abu Dhabi, he emphasized that a price of USD 100 per barrel of oil is not in the interest of either the producing countries or the consumers. Therefore, the increasing crude oil prices could potentially lead to organized chaos and devastation in several parts of the world.