After weeks of threatening to reopen the Strait of Hormuz, which it closed after joint US-Israeli strikes, the Donald Trump administration has now surprised the world by moving to close the main strait itself.
President Trump’s announcement, made after the collapse of talks with Iran in Pakistan last weekend, has left many scratching their heads. Because he just made the same move that angered Iran.
After telling reporters that he “didn’t care” if Tehran was ready for another round of negotiations, the notoriously volatile Trump gave the OK for the US Navy to blockade all ships trying to enter or exit the Strait of Hormuz.
Iran’s blockade of the strait has already sparked a global energy crisis and led to markets collapsing as oil prices soared.
While the US military’s Central Command (CENTCOM) has made it clear that only ships transiting to and from Iranian ports will be affected, the US blockade poses another set of problems for the world, especially India.
How will Trump’s blockade affect India?
India imports more than 85% of its crude oil needs, making it the third largest oil importer in the world. Most of this oil comes from the Gulf region and passes through the Strait of Hormuz to reach New Delhi.
However, with the Iranian blockade, India has seen major disruption to its supply chain. Due to decades-long diplomatic relations with Tehran, many Indian-flagged ships and other ships bound for India have been allowed to pass.
The Hormuz stranglehold also prompted India to resume purchasing Russian oil, after “due permission” from Washington.
While the aim of Trump’s blockade is to further cripple the Iranian economy, the country is still managing its exports, as India was one of the countries that received Iranian oil during the war with the US and Israel. China is already a big buyer of Iranian oil. It is not clear whether the United States wants to escalate the war by striking any ships heading to China.
However, reports that Iran is collecting royalties from ships have particularly troubled Trump. Two large Chinese state-owned tankers carrying Iraqi and Saudi oil had crossed the strait on April 11, before the US blockade. As did a tanker flying the Liberian flag. While there has been no confirmation from the two countries, it has been reported that they paid fees for safe passage under Iranian escort.
The country that did not pay transit fees for its ships and tankers is India. New Delhi stated that it had not paid any fees for its ship’s passage and that it was good relations with Iran that allowed them to move. This is what the Iranian envoy in New Delhi also said. Thus, in addition to the Chinese and Liberian ships, the Indian-flagged LPG ship, Jag Vikram, transited the Strait of Hormuz on April 11.
India could once again turn to Russia for crude oil, but the US waiver that allowed these purchases to resume expired on April 11. India has reportedly sought an extension, although nothing has been officially said.
Unless the “permission” is extended, India’s purchase of Russian oil would affect its relations with Washington, especially as it recovers from Trump’s previously imposed 50% tariff rate. This has now come down to 10%, as a US-India trade deal is also in the works.
India maintains its stance of no shortage
In an inter-ministerial briefing on Monday, the Ministry of Petroleum and Natural Gas said that the Narendra Modi government has ensured 100% supply of domestic and Papua New Guinean LPG and CNG (transportation).
During the early days of the war between the United States, Israel and Iran, India announced that it would prioritize domestic LPG use, with commercial use focusing on hospitals and educational institutions.
The government on Monday added that no drought cases have been reported across India at LPG distributors. However, prices have peaked for many users who buy from the gray market in particular.
