India can find alternative sources for crude, but LPG at risk: Executives

NEW DELHI: The resumption of US-Iran hostilities, Houthi attacks on Saudi Arabia and a proposed US toll on cargo transiting the Strait of Hormuz are driving crude prices sharply higher and raising fresh concerns over India's oil and gas supplies.

Benchmark Brent crude climbed above $86 a barrel on Tuesday from last week's low of $72.

Industry executives said India should be able to source alternative crude and LNG supplies, albeit at higher prices. LPG supplies, however, which depend heavily on imports from the Gulf, could again come under strain. One executive also warned that the renewed conflict has introduced deeper uncertainties at a time when global inventories have already been depleted after months of stock drawdowns.


"It's increasingly clear that Iran is not going to give up its control over the Strait of Hormuz, and it's willing to sustain the conflict and widen it," said an industry executive, referring to renewed Iranian attacks on tankers and the Houthis' involvement in the conflict. "And the US or the Gulf countries cannot accept Iranian control of the Strait. So, it's hard to speculate how it will all end."

US-Iran war: Trump drops 20% toll plan on Hormuz, seeks Gulf investment deals instead

The US announced on Monday that it would resume its naval blockade of Iran and use its military to keep the Strait of Hormuz open after Iran declared it closed. US President Donald Trump has also proposed a 20% charge on all cargo transiting the strait.

The proposed levy has puzzled industry executives, who estimate it would raise the cost of crude shipped through the strait by roughly $15 a barrel at current prices. "With such cost differentials, why would anyone order crude from the region?" an executive asked, adding that the US may struggle to implement the proposal because of its poor economics and likely broader opposition.

Executives said Gulf crude shipments would remain constrained, redirecting demand to non-Gulf suppliers keeping oil prices elevated.

DG Shipping to monitor Indian seafarers irrespective of vessel flag: Sarbananda Sonowal

The Houthis of Yemen, an Iranian ally that had remained on the sidelines since the US-Iran conflict that began on February 28, launched missiles at Saudi Arabia after accusing the kingdom of bombing their airport in Sana, Yemen. Their entry into the conflict has revived fears of disruptions to the Red Sea route, a key shipping corridor for oil supplies to Asia and an alternative export route for Saudi crude since the Strait of Hormuz was disrupted.

In 2023, Houthi attacks on merchant vessels in the Red Sea forced many shipping companies to reroute via the Cape of Good Hope, increasing transit times and freight costs.

India condemned Tuesday's attacks on two ships transiting the Strait of Hormuz that killed one Indian seafarer and injured 10 others. In a statement, the ministry of external affairs called for an end to attacks on commercial vessels and civilian infrastructure and demanded that free navigation through the strait be restored.