While only a small proportion of Indian
crude imports come via the Suez Canal, the surge in international crude prices triggered by fears that the turmoil in Egypt could disrupt the movement of ships to Europe, poses a major problem.
Even as ships are sailing smoothly through the strategic waterway, prices of high quality
Brent crude hovered above $100 (Rs 4,560) a barrel while Gulf crude was quoted at $95 (Rs 4,333) per barrel.
A senior official at Indian Oil Corp Ltd (IOC) said speculators backed by cash-rich hedge funds seem to be responsible for the price hike. "We are waiting and watching the situation and hope it stabilises soon," he added.
The 192-km canal links the Red Sea with the Mediterranean Sea and is the crucial passageway for crude oil imports from the Gulf to Europe and America. Egypt earned close to $5 billion last year from ships that have to pay a fee for using the strategic waterway.
This is seen as a major incentive for the country to keep the canal functioning.
According to shipping industry sources, it takes around 10 days for a ship to carry oil from the Gulf to a European port. But in case the Suez Canal is shut, the ships will have to take a circuitous route - around the Cape of Good Hope - which would take as many as 40 days.
This would result in the disruption of crude supplies to the refineries and higher prices of petroleum products. "Shipping costs would also shoot up as fewer ships will be available because of the longer sailing time,"a senior industry official said.
India imports most of its crude from the adjoining Gulf countries that lie east of the Suez Canal.
According to petroleum ministry sources, India imported 104 million tonnes of crude from the Gulf countries such as Saudi Arabia, Oman, Kuwait and United Arab Emirates (UAE). This was followed by 33 million tonnes of crude from Africa mainly from Nigeria, which also does not come through the Suez Canal.
Only 12.1 million tonnes of crude were imported from South America, mainly Venezuela, through the Suez Canal and these could be staggered in case of trouble.
However, while the movement of Indian oil imports will not be directly affected by any trouble on the Suez Canal, the country's exports to America and Europe would be adversely impacted.
The lucrative Western markets account for as much as 35 per cent of India's exports most of which move through the Suez Canal.
As far as India's bilateral trade with Egypt is concerned there could be some adverse fallout but since this constitutes a very small fraction of the country's total trade it would not affect the overall numbers, a commerce ministry official said.
The total trade with Egypt is around $3 billion, which is less than one per cent of India's total trade volume.
Courtesy: Mail Today 
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