BRACING FOR AN ENERGY SQUEEZE

War-driven disruptions in global oil and gas markets push India to secure supplies and manage costs

- By M.G. ARUN

ON MARCH 8, OIL PRICES BRIEFLY SURGED PAST A PSYCHOLOGICAL threshold that had not been breached since the early days of the Russia-Ukraine war in 2022. Brent crude prices climbed above $100 (about Rs 9,200) a barrel as the conflict in West Asia escalated sharply, and have remained highly volatile since. Cargo movement through the Strait of Hormuz-one of the world's most critical energy arteries linking the Persian Gulf to the Gulf of Omanhas been severely disrupted after the US and Israel launched strikes on Iran on February 28, prompting retaliatory attacks on Tel Aviv as well as US military locations, refineries and civilian infrastructure across the Gulf nations.

Even without a formal blockade, warnings from militant groups that vessels passing through the strait could be targeted have discouraged shipping companies from operating there. War-risk insurance costs have surged, further complicating the movement of cargo. For New Delhi, the crisis is a direct economic threat. With more than 85 per cent of its crude imported and roughly half of those supplies moving through the Strait of Hormuz, the government has begun activating contingency measures from regulating natural gas supplies and boosting LPG production to reopening the option of buying Russian crude-to cushion the economy from a prolonged energy shock.