{"id":45785,"date":"2025-06-20T21:15:54","date_gmt":"2025-06-20T15:45:54","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=45785"},"modified":"2025-07-16T18:17:26","modified_gmt":"2025-07-16T12:47:26","slug":"oil-prices-increase-amidst-iran-israel-tensions","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/20-06-2025\/oil-prices-increase-amidst-iran-israel-tensions","title":{"rendered":"Increase in Oil Prices Amidst Iran-Israel Tensions\u00a0"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/ International Relations, GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Recent tensions between Iran and Israel have led to a spike in global oil prices.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In mid-June 2025, the renewed military flare-up between Iran and Israel sent shockwaves through energy markets.&nbsp;<\/li>\n\n\n\n<li>The Brent crude futures surged by nearly<strong> 9% <\/strong>on June 13 to <strong>$75.65 per barrel, <\/strong>peaking at $78.50, a near five-month high.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Reasons for Increase in oil prices<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Vulnerability of the Strait of Hormuz:<\/strong> The Strait of Hormuz connects the <strong>Persian Gulf to the Arabian Sea <\/strong>and is the world\u2019s most crucial <strong>oil transit chokepoint.<\/strong>\n<ul class=\"wp-block-list\">\n<li>In 2024, it facilitated the transport of around <strong>20 million barrels <\/strong>per day, about <strong>20% <\/strong>of global petroleum liquids consumption.<\/li>\n\n\n\n<li>Countries such as <strong>Saudi Arabia, UAE, Kuwait, Iraq, and Iran<\/strong> rely on this route for exports.&nbsp;<\/li>\n\n\n\n<li>Closure or disruption, even temporary, raises shipping delays, and energy costs.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Potential Supply Chain Disruptions:<\/strong> Conflict in the Middle East could also hinder access to the <strong>Suez Canal and the Red Sea<\/strong>, affecting alternative maritime routes and leading to logistical and financial challenges for global oil trade.<\/li>\n\n\n\n<li><strong>Risk Premium: <\/strong>The possibility of a large-scale conflict or blockades results in <strong>speculative buying <\/strong>and a risk premium on oil, pushing prices up even before any physical supply disruption occurs.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Implications for India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rising Import Costs: <\/strong>India imports over <strong>80%<\/strong> of its crude oil. As the global price increases, it will raise India\u2019s overall import bill.<\/li>\n\n\n\n<li><strong>Inflationary Pressures: <\/strong>A rise in crude <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/20-06-2025\/oil-prices-increase-amidst-iran-israel-tensions\"><strong>oil prices<\/strong><\/a> can spill over into transport, logistics, and manufacturing, causing a rise in retail inflation.<\/li>\n\n\n\n<li><strong>Economic Growth and Investment:<\/strong> A sustained surge in prices may dent corporate profitability and delay private sector investments, especially in energy-intensive sectors.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Accelerate Renewable Energy Transition: <\/strong>Reducing long-term dependence on fossil fuels.<\/li>\n\n\n\n<li><strong>Strengthen <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/22-10-2021\/strategic-petroleum-reserves\">Strategic Petroleum Reserves<\/a> <\/strong>to cushion short-term shocks.<\/li>\n\n\n\n<li><strong>Diversify Energy Sources:<\/strong> Including gas imports, biofuels, and electric mobility.<\/li>\n\n\n\n<li><strong>Diplomatic Engagements: <\/strong>To support de-escalation and secure oil supply routes.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concluding Remarks<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The ongoing Iran-Israel tensions have revived global concerns about energy security and price stability.&nbsp;<\/li>\n\n\n\n<li>For India, the conflict is a reminder of the country&#8217;s high vulnerability to external shocks due to its dependence on oil imports.&nbsp;<\/li>\n\n\n\n<li>While current reserves and diversification strategies offer some resilience, a prolonged conflict could have significant economic and fiscal consequences.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong>Strategic Petroleum Reserves<\/strong><br>&#8211; The government of India, through a Special Purpose Vehicle called <strong>Indian Strategic Petroleum Reserve Limited (ISPRL)<\/strong>, has established <strong>Strategic Petroleum Reserves (SPR) facilities<\/strong> with a total capacity of <strong>5.33 Million Metric Tonnes <\/strong>(MMT) of crude oil at<strong> 3 locations.<\/strong><br>&#8211; <strong>The locations are as;<\/strong><br>1. Vishakhapatnam (1.33 MMT),&nbsp;<br>2. Mangaluru (1.5 MMT) and&nbsp;<br>3. Padur (2.5 MMT) capacity.<br>&#8211; Government of India in 2021, had also approved the establishment of<strong> two additional commercial-cum-strategic petroleum reserve facilities <\/strong>with total storage capacity of <strong>6.5 MMT at;<\/strong><br>1. <strong>Chandikhol (4 MMT) in Odisha <\/strong>and&nbsp;<br>2. <strong>Padur (2.5 MMT) in Karnataka<\/strong>.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/business\/Economy\/why-oil-prices-are-increasing-amidst-iran-israel-tensions-explained\/article69705699.ece\" rel=\"nofollow noopener\" target=\"_blank\"><strong>TH<\/strong><\/a><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">Recent tensions between Iran and Israel have led to a spike in global oil prices.<\/li>\n<p><\/p>\n<h3><strong>About<\/strong><\/h3>\n<li class=\"ms-5\">In mid-June 2025, the renewed military flare-up between Iran and Israel sent shockwaves through energy markets.\u00a0<\/li>\n<li class=\"ms-5\">The Brent crude futures surged by nearly 9% on June 13 to $75.65 per barrel, peaking at $78.50, a near five-month high.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/20-06-2025\/oil-prices-increase-amidst-iran-israel-tensions\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-45785","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/45785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=45785"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/45785\/revisions"}],"predecessor-version":[{"id":48255,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/45785\/revisions\/48255"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=45785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=45785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=45785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}