Explained: Why India’s crude oil price could rise following blockage of Suez Canal

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In an analysis of the blockade, Vortexa noted Thursday: “If the issue is not solved today it will start to have implications on the bigger trade flow and shipping sectors. If it is not solved by the coming spring tide (27/28 March) it will begin to affect refining operations on a broader scale”.

For India, though, the main hit could be seen on the import and export of ethane with the US, and the imports of crude from Latin America, the uptake of which was recently increased.

India imports around 500,000 barrels per day of crude products via the Suez Canal, followed by China, which imports just above 400,000 barrels per day, and South Korea and Singapore, which import a little less than 400,000 barrels per day from the Suez Canal, according to Vortexa. Reportedly, at its peak in December 2020, India imported nearly 5 million barrels of crude oil per day.

Among exporters of crude products via the Suez Canal, India is sixth in the pecking order behind Russia, Saudi Arabia, Iraq, Libya and Algeria at a little less than 200,000 barrels per day.

Longer the hold-up, bigger the impact

The biggest impact on the oil trade and crude prices will be if the freeing of the container ship ‘Ever Given’ takes weeks, as is now being predicted. The longer the closure, the more disruptive the impact is likely to be.

India’s Petroleum product imports; 2/3rds comes from West Asia, rest from Africa, Europe, North America, South America and South-East Asia.

The 440 meters long, 59 meters wide ship is badly stuck, with its bow crammed into the eastern bank of the canal and its stern on the opposite bank.