Between the months of March and August, India has incurred an estimated $22 billion in gross additional fossil-fuel import costs following the energy-price shock triggered by the Hormuz crisis.
According to an analysis by the Centre for Research on Energy and Clean Air (CREA), the country became the second-most affected importing country after China. India’s net additional cost for crude oil stood at $20.5 billion.
India’s net additional cost across all fossil fuels was estimated at $14.4 billion, equivalent to 0.38 per cent of its gross domestic product (GDP), or about 1.4 days of national income.
CREA released an analysis of seaborne crude oil, oil products and liquefied natural gas (LNG) saying India’s additional cost between March and August was the third-highest among major fossil-fuel importers, after the European Union at $78 billion and China at $35 billion.
The figures measure the additional amount importers paid over what futures markets had expected before the strikes.
Fossil-fuel importers paid a gross extra cost of $330 billion for seaborne crude oil, oil products and LNG in the six months following the US-Iran war, compared with what pre-war futures markets had expected they would pay over the same period.
Crude oil accounted for the largest share at $164.1 billion, followed by diesel and gasoil at $73.8 billion, gasoline at $35.7 billion, LNG at $38 billion across the two basins, and jet fuel at $20 billion.
The estimated gross additional cost to importers does not account for additional earnings by countries that also export fossil fuels.
Operation Economic Outcast
Recently, the United States (US) President Donald Trump administration has led the ‘Operation Economic Outcast‘ which is aimed at cutting Iran off from the global economy.
Experts said the move could affect India even though New Delhi’s direct trade with Tehran has fallen sharply in recent years.
The US has stepped up economic pressure on Iran and the campaign seeks to restrict Iran’s access to oil revenues, shipping, finance and international trade. It also warned countries and companies doing business with Tehran of possible secondary sanctions.