Middle East Crisis: Why India’s Oil Dependence Is a Risk Again
India’s Oil Reliance: A Long-Standing Weakness
India imports over 80% of its crude oil, with a large share routed through the Middle East. Tensions in the region have once again raised the threat of supply disruption and price volatility.
Geopolitical Tensions Driving Price Fears
Recent conflicts near the Strait of Hormuz threaten key shipping routes. This could push oil prices above $90 per barrel, straining India’s import bill and weakening the rupee.
Agarwal’s Call: Build Domestic Energy Strength
Vedanta Chairman Anil Agarwal argues that India must reduce import dependency. His suggestions include:
Lowering oil taxes from 70% to ~30%
Faster approvals for exploration
Granting longer lease terms
Boosting private investment in domestic fields
India Has Untapped Potential
India holds oil reserves 3x its current consumption but underutilizes them. Reform could turn India from a top importer to a stronger producer in the next decade.
Frequently Asked Questions (FAQs)
Why is India’s oil dependence risky now?
Middle East instability threatens supply chains and causes sharp oil price rises, impacting India's economy.
What reforms does Anil Agarwal suggest?
He recommends tax cuts, regulatory simplification, lease extensions, and private sector incentives for oil exploration.
How dependent is India on the Middle East for oil?
About 60–70% of India’s crude comes from the Middle East, mostly via the vulnerable Strait of Hormuz.
Can India produce more oil locally?
Yes. India has reserves, but high taxes and slow approvals limit production. Policy reform could unlock significant output.
What’s the impact of high oil prices on India?
It raises fuel costs, widens the current account deficit, weakens the rupee, and drives inflation.
Published on: June 25, 2025
Uploaded by: PAVAN
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