crude oil
The impact of the ongoing conflict in West Asia is now clearly visible on the energy supply of the entire world. According to a recent report by the International Energy Agency (IEA), due to this crisis, the supply of 13 million (13 million) barrels of crude oil has been taken out of the global market every day. This is considered to be the biggest supply shock in history so far.
It has been said in the report that the main reason for this crisis is the huge obstruction in the movement of oil ships passing through the Strait of Hormuz. This is one of the most important waterways in the world, from where large quantities of crude oil and gas reach different countries of the world. Any kind of disruption here has a direct impact on the global supply chain.
According to IEA, a big decline was recorded in global oil production in the month of March. Total supply decreased by 10.1 million barrels per day to 97 million barrels per day. The reason for this decline is attacks on energy infrastructure in the Middle East and restrictions on tanker movement from Hormuz.
According to the report, the production of OPEC Plus countries decreased by 9.4 million barrels month-on-month to 42.4 million barrels per day. At the same time, the supply of non-OPEC countries also decreased by 7.7 lakh barrels per day to 54.7 million barrels. It is clear from this that the crisis has affected almost every major oil producing country. Overall, the oil supply decreased by more than 360 million barrels in the month of March and this figure is expected to reach 440 million barrels in April. This means that the situation may become more serious in the future.
The impact of this crisis is not limited to production only, but has also affected oil reserves. Globally, oil stocks declined by 85 million barrels in March, but this decline was especially visible outside the Gulf region. Oil reserves outside the Gulf declined by 205 million barrels, which is equivalent to a decline of 6.6 million barrels per day.
This situation is very important for India, because the country imports a large part of its needs from Gulf countries. Essential commodities like crude oil, LNG, fertilizers and petrochemicals mostly come via Hormuz. If this path remains blocked for a long time, oil prices in India may increase. Apart from this, shipping costs, insurance premium and delivery time will also increase. This will have a direct impact on inflation.
This crisis is not limited to oil and gas only, but it is also having a big impact on international trade. According to UNCTAD data, the supply of many essential goods depends on this route. About 77% of sulfur shipments, 57% of hydrocarbon related products and 29.2% of nitrogen fertilizers are traded through Hormuz. If this route remains blocked, the availability of these products may be affected. Apart from this, a large part of industrial products like aircraft engine parts, steel structures, chemicals and plastics also pass through this route. About one-third of the world's aluminum sheets and plates are shipped from this region, while about 25% of synthetic rubber is also produced in countries that depend on this route.
