Crude Oil Supply Concerns Deepen Amid Middle East Tensions; India Reviews Fuel Availability

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New Delhi/Doha/Riyadh, March 2: Escalating geopolitical tensions in the Middle East have begun to disrupt global energy supplies, raising concerns over crude oil and liquefied natural gas (LNG) availability and triggering sharp price movements in international markets.

India, which relies on imports for more than 85 per cent of its crude oil requirements — a significant portion sourced from West Asia — could face increased economic pressure if global oil prices remain elevated. According to industry estimates cited by The Economic Times (ET), every $1 increase in global crude prices raises India’s annual import bill by approximately $2 billion, adding to inflationary pressures and widening the current account deficit.

Crude oil is a key raw material used in the production of everyday consumer goods such as detergents, biscuits, toothpaste, paints and packaging materials. Petroleum-based derivatives are widely used in products including soaps, shampoos, creams, hair oils, plastic bottles and tubes. These inputs account for over 25 per cent of production costs for FMCG companies and nearly 40 per cent for paint manufacturers, meaning sustained crude price increases could translate into higher consumer prices.

LNG Production Halted in Qatar

Energy supply concerns intensified after Qatar’s state-run energy giant QatarEnergy suspended LNG production following reported military strikes on its facilities in Ras Laffan Industrial City and Mesaieed Industrial City.

In a statement, the company said it had ceased production of liquefied natural gas and associated products due to security concerns arising from the attacks. QatarEnergy is the world’s largest LNG producer, making the disruption significant for global energy markets.

Earlier, Qatar’s Defence Ministry said two drones launched from Iran had targeted infrastructure in the country. One drone struck a water tank linked to a power plant in Mesaieed, while the other hit an energy facility in Ras Laffan operated by QatarEnergy. Authorities reported no casualties.

The disruption had an immediate impact on global markets, with European natural gas prices surging by nearly 50 per cent amid fears of prolonged supply constraints from one of the world’s most critical LNG exporters.

Saudi Refinery Disruption

Meanwhile, Saudi Arabia temporarily shut down certain units at the Ras Tanura oil refinery in its eastern region after a fire broke out following a separate drone strike. The incident added to supply-side anxieties in global crude markets.

India Monitoring Situation

Amid the escalating situation, India’s Ministry of Petroleum and Natural Gas said it is closely monitoring developments.

In a post on X (formerly Twitter), the ministry stated that the Minister of Petroleum and Natural Gas reviewed the supply situation for crude oil, LPG and other petroleum products with senior officials and public sector undertakings (PSUs).

“We are continuously monitoring the evolving situation and all steps will be taken in order to ensure availability and affordability of major petroleum products in the country,” the ministry said.

As tensions persist, energy markets remain volatile, with investors closely watching developments that could further disrupt supplies across the Gulf region.(TOI)