Guardrails panacea for energy security

India's energy economy and state finances have suffered since 2022, when Russia invaded Ukraine, because of lack of adequate stock and dependence on foreign fuel

- SDINAKAR

One would expect India's policymakers and refiners to rest easy after Washington hemmed, in a patchwork fashion, a ceasefire between Israel and Iran on Monday night, which may prove too delicate to offer a lasting solution to peace in West Asia.

Two-and-a-half hours into the ceasefire, Israel accused Iran of raining missiles and prepared to strike back. It's a fragile cease fire.

"But looking beyond the ceasefire, the deeper challenge remains - a lasting peace would require rapprochement between Israel and Iran," said Vandana Hari, a Singapore-based energy expert.

For now, a sense of calm has prevailed over markets. With the risk premium evaporating, Brent crude has surrendered all gains made since mid-June, when Israel attacked Iran, and currently trades at $67 per barrel. European benchmark TTF (Title Transfer Facility) gas prices have dropped over 10 per cent, sending Asian spot LNG (liquefied natural gas) rates lower.

"While the situation remains fluid, markets are rapidly unwinding risk premiums and refocusing on fundamentals," said Paris-based maritime intelligence agency Kpler, adding: "A rebound in crude loadings is expected in coming days." LNG vessel traffic through the Strait of Hormuz is rebounding, with Kpler data showing nine LNG ships transiting the Strait on Tuesday-more than double the previous day's count, and above the weekly average.

Build firewalls

Industry officials and energy experts Business Standard spoke to view the latest conflict involving Iran, Israel and America- the third such flareup in the last four years as a wakeup call for New Delhi to accelerate building guardrails to secure itself against uncertainty in energy supplies.