NEW DELHI: The blockage in Suez Canal will not impact India’s crude supplies. But if the disruption lasts longer than 48 hours, it could hurt fuel consumers by pushing up tanker rates and hit export of petroproducts to Europe from Indian refiners.
Some 156 ships have been stuck in the canal since Tuesday after a container ship, Ever Given, ran aground on Tuesday. “There is no inbound Indian oil shipment in the gridlock,” an official dealing with oil shipments told TOI requesting anonymity.
B Ashok, former chairman of India’s largest refiner IndianOil and the current head of a proposed $70-billion Maharashtra refinery project, also doesn’t see a major cause of concern at this point. “More than two-thirds of our crude comes from the Gulf. Some shipments from Latin America or Central Asia may get delayed. But if the blockage lasts longer then crude and tanker rates will be impacted,” he said.
The shipping official said about 5% of India’s crude imports come through the Suez. Even US crude is mostly imported through the African sea route. “Only shipments from Ceyhan in Turkey would take longer if the blockage lasts long. If the blockade lasts beyond 48 hours, ships will have to take a longer route around Africa, requiring 7-10 days. This could lead to a shortage of vessels.”
Shipping rates have gone up 10 points in the last two days. Higher transportation charges could impact pump prices, at least reduce the quantum of reduction.
But for now, fuel consumers can expect the spell of itsy-bitsy price cuts to continue. Petrol and diesel prices were cut for the second day in a row on Thursday. Global benchmark Brent crude had jumped 4% on Tuesday on news of the shipwreck. But lost the ground on Wednesday and extended the loss on Thursday to $61.83 per barrel.
The blockage could, however, impact product exports to Europe from private refineries since it is the preferred route for them. According to the US Energy Information Agency, Suez and SUMED pipeline, both joining the Mediterranian and Red seas, account for about 9% of the total seaborne oil trade.