There is plenty of oil available in the world. In fact, the biggest worry of major oil producers is the lack of sufficient growth in demand. And yet, the world has fallen in the grip of a serious oil crisis, with prices soaring and almost 20% of the supply - from the Persian Gulf region - disrupted.
The reason: weaponisation of oil.
First, the West sanctioned the Russian oil and gas in efforts to "punish" Moscow for invading Ukraine. And, now, Iran has weaponised oil and LNG in the most dramatic and devastating manner - by shutting down the Strait of Hormuz in the Gulf, which is the jugular vein of the global oil supply system and indeed of the world economy.
Unsurprisingly, the world is in shock. Oil importers - almost 80% countries are energy-deficient - because, for them, energy security is all about securing the oil supply, and oil exporters because, in most cases, their survival depends on securing demand.
Iran Used Its Biggest Card
Iran knows this geo-energy mathematics well. It could not match the military might of the United States and Israel. So, it has done what has never happened before in history - closing the Hormuz without actually closing it. Just by warning that any oil or gas tanker that dares to cross the Strait will be attacked. It worked.
But what could be the big agenda behind this high-risk, high-voltage geopolitical game?
Clearly, the United States wants Iran to be out of the way in its long-term strategy to help Israel establish itself as the hegemon of the oil- and gas-rich Middle East region. Secondly, the US wants to demolish the ever-rising Chinese influence and massive economic presence in the region, particularly in Iran. Washington also wants Iran's massive oil and gas reserves to be accessible to Western companies on their terms. Lastly, the Americans want the Shia-Iran to be a pawn in their hand to counterbalance the region's Sunni powers, most particularly, the Kingdom of Saudi Arabia.
Understandably, it is unacceptable to Iran, an old civilisation with the mindset of a big power, if not that of an imperial power - which it used to be in the time of Cyrus the Great.
This geopolitical war will go on for long, even after the guns go silent for the time being.
Can't Escape Coal, Oil, Gas - For Now
Coal, oil and gas still account for 81% of global primary energy consumption despite an impressive growth in renewables, more so in solar power. Oil will remain king for a long time to come, probably for another 20 years, if not more. The world is still a fossil fuel-driven economy - India even more so. Trump 2.0 knows it. His cry "Drill, Baby, Drill" on the day of his inauguration last year was the announcement of a new energy doctrine, not just a political slogan. Venezuela was the first to fall. Trump 2.0 wants Iran for the same, first and foremost. Colombia should be on guard.
What about us?
India's Sticky Spot
Well, ours is an out-and-out oil economy. And our dependence on imports is only growing. Out of 5.7 million barrels of oil that we consume daily, we import 5.2 million, much of it from the Persian Gulf exporters such as Saudi Arabia, Iraq, Abu Dhabi and Kuwait. This dependence is projected to go up to 8 million barrels daily if our economy continues to grow at a higher pace. We might be importing even more if our GDP growth rate hits a double-digit mark, say, 10%.
India needs a pragmatic and honest energy security policy for 2050 and beyond. The future belongs to renewables and nuclear power, undoubtedly. But we first need to invest more aggressively in hydrocarbons at home and overseas to secure our energy future for the next three decades and so. Prioritising renewables or hydrogen at the cost of oil and gas will be tantamount to energy suicide.
The fact is, we have neglected the oil and gas sector for the last 20 years. Many of us got carried away with the West-led "demonise oil, prioritise green energy" narrative. Of course, we need to prioritise all sources of green energy, but that should not happen at the cost of oil and gas. Every household in India still cooks on a gas stove. Most cars are still powered by oil or gas. All aeroplanes and ships are still and will continue to be powered by oil for decades to come.
The Big Lesson For India
The war will end soon, hopefully. Oil tankers will start moving in and out of the Strait of Hormuz as soon as the guns fall silent. But, for India, this war will leave a big lesson behind. Pay more attention to oil and gas. Pay more attention to investing in oil and gas exploration and production at home. But, even more importantly, encourage Indian oil players to reach out and invest more in oil and gas exploration, production, storage, refining and shipping business overseas with focus on energy surplus regions in West Africa, Latin America, the United States and Canada, the Middle East and Russia. And do not forget Iran, the oil and gas superpower geographically closest to us.
Build strong and sustainable oil and gas alliances with one and all with the same precision and killer instinct that is deployed when building military alliances such as NATO or the erstwhile Warsaw Pact. Let us not forget that no other large emerging economy is more dependent on imports for a strategically crucial commodity like oil than India. We can not secure India economically and militarily without first - and, probably, foremost - securing India in terms of oil and gas.
(Narendra Taneja is a globally reputed thought leader in energy policy and geopolitics)
Disclaimer: These are the personal opinions of the author
