The energy crisis as a result of the supply disruption around the Strait of Hormuz has far-reaching impact. Several Indian compaies too are announcing suppky curns as a result. The latest to join the list is Mangalore Refinery and Petrochemicals (MRPL).
The company has shut one crude unit and some secondary units at its 300,000 bpd refinery due to supply shortage, as per a report by Reuters citing sources.
MRPL had also declared force majeure, suspending contractual obligations, on all gasoline export cargoes scheduled for March and April. MRPL operates a 500,000-barrel-per-day refinery in Karnataka and exports about 40% of its refined fuel output.
Hormuz tension trigger oil and gas supply fears for India
With the Strait of Hormuz now reportedly under the control of Iran’s Islamic Revolutionary Guard Corps (IRGC), concerns over oil and gas prices and supply disruptions have intensified. The impact is already visible, with Indian companies announcing force majeure.
Gas supplies are also facing a shock due to tensions in the Middle East. Most importantly, Qatar has declared force majeure on gas exports, halting production and liquefaction at QatarEnergy. With operations likely to remain shut for up to two weeks — and restart timelines equally long — companies globally are bracing for near-term gas shortages.
GAIL, Gujarat Gas curb supply, Adani Total hike prices
However, MRPL is not the only one. According to a Reuters report, Adani Total Gas has nearly tripled rates of gas for excess consumptionover and above 40% of the daily contracted quantity to Rs 119 ($1.30) per standard cubic meter from around Rs 40 per standard cubic meter earlier.
Gujarat Gas announced it will cut contracted supplies to industrial customers from March 6 and has invoked force majeure. Petronet LNG has also issued force majeure notices to its suppliers including QatarEnergy, and to its domestic buyers including GAIL (India), Indian Oil Corp and Bharat Petroleum Corp.
GAIL too is reportedly considering supply curbs to tide over the current disruption.
Oil prices emerge as biggest transmission risk for India amid global tensions
Crude become crucial for Indian economy as it imports more than 80% of its crude oil needs. “A sharp rise in crude prices raises input costs, widens the current account deficit and feeds inflation,” a report by Axis Asset Management said.
Crude prices has already surged near $84 from $72 on Friday, before the conflict accelerated.
Axis Securities also highlighted that sectors such as aviation, paints, cement and chemicals typically react quickly to rising oil prices.