India intensifies talks to check oil prices as US-Iran tensions rise

India has stepped up diplomatic initiatives with top oil producers as rising US-Iran tension has pushed up crude prices and may raise freight and insurance costs.

While tension has been rising for a year since the US decided to re-impose sanctions on Iran, recent attacks on oil cargoes in the Gulf region and downing of a US drone by the Islamic Republic has magnified the anxiety.

In just a fortnight, oil minister Dharmendra Pradhan has spoken to US energy secretary Rick Perry, Russia’s deputy prime minister Yury P Trutnev, UAE minister Sultan Ahmed Al Jaber, and Saudi energy minister Khalid Al-Falih to discuss the geopolitical situation and its effect on oil prices. He sought their help in keeping prices at a reasonable level. For India, which imports 84% of its oil needs, any supply disruption or a price flare can be damaging. Oil gained 5% in a week on US-Iran conflict.

“We are closely watching the situation. As of now supply lines are ok,” said M Venkatesh, managing director of state-run Mangalore Refinery and Petrochemicals Ltd. He said, so far there was no impact on insurance and freight.

“If the tension persists, freight and insurance would naturally go up. The risk has gone up, and shippers and insurers would start factoring in this soon,” said another industry executive, who didn’t want to be named.

Indian Navy has deployed warship and aircraft to secure tankers headed to India from the Persian Gulf region. It would be hard for one or two warships to fully secure all oil cargoes meant for India but it can be a strong deterrent for anybody wanting to harm ships, the executive said.

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Executives said a US-Iran war was unlikely as neither side seems to want it. “But if there is a war, it would get over within days and is unlikely to affect supply lines for India,” the executive said. Any attempt by Iran to block the Strait of Hormuz, through which about a third of oil tankers pass, will not succeed since the US has a heavy military presence there, the executive said. Also, the world will turn against Iran if it were to attempt something like that, he said.


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