Iran and Israel are fighting, while China is playing a big game! How will this affect India?
Amid the Iran-Israel war, China is cleverly stockpiling cheap crude oil. If this tension pushes crude oil prices to $110 per barrel, China stands to reap substantial profits. This, meanwhile, is a warning signal for India. The rising oil prices in the global market will directly impact your pocket, and inflation, along with petrol and diesel prices, is bound to rise in the country.
Tensions between Iran and Israel are once again at their peak. Amidst the noise of missiles and attacks, a game is underway that will directly impact your pocketbook.
The world's attention is focused on the simmering situation in the Middle East, but China has made a highly strategic move. This conflict is no longer just between two countries.
If this war drags on, petrol and diesel prices in India could skyrocket. While the war threatens to drive up crude oil prices, the Dragon is exploiting this global crisis as a major business opportunity. Let's understand what's going on behind the scenes and how it will impact your kitchen and everyday expenses.
The important sea route that determines the price of oil
This tension in the Middle East is directly impacting the crude oil supply chain. Iran produces approximately 3.3 million barrels of crude oil every day, representing approximately 3 percent of the world's total supply.
The Strait of Hormuz poses the greatest threat. This sea route is crucial because approximately 20 percent of the world's oil trade passes through it.
Since the US increased its military activity in the region, crude oil prices have jumped by 10 percent. The cost of shipping oil from the Middle East has increased by 584 percent compared to the first week of January, even before the war began.
The situation is such that the daily fare for large ships (with a capacity of 2 million barrels) traveling from the Middle East to China has exceeded $200,000. Experts believe that if the fighting doesn't stop, crude prices could reach dangerous levels of $110 per barrel.
How did China fill its coffers under the guise of war?
While the world fears potential economic losses, China is quietly filling its energy coffers. In recent days, China has purchased large quantities of crude oil from Russia, Saudi Arabia, and Iran. Saudi Arabia's leading oil shipping company, Bahri, has sent five massive supertankers to China, the largest shipment in six months.
The matter doesn't end there. Saudi Arabia has prepared to send an additional 8 million barrels of oil to China next month. Amid growing tensions with the US, Iran has also significantly increased its oil supply to China.
Between February 15th and 20th, Iran's crude exports jumped 200% to 20 million barrels.
This translates to approximately 3 million barrels per day, far exceeding Iran's normal exports. Satellite images have also confirmed that the number of oil tankers at Iranian ports has increased from 8 to 18. Iran followed a similar pattern before the US attack last year and in early 2024.
Dragon is preparing to make huge profits by buying cheaply
China is currently the world's largest importer of crude oil. Last year, it imported 11.6 million barrels of crude oil daily, a 4.4 percent increase from 2024. Iran's economy is largely dependent on oil exports, and most of its oil goes to China.
Experts say that China has amassed a vast stockpile of crude oil. Its strategy is clear:
it has purchased large quantities of oil at cheap prices during this tense environment. In the future, when navigation in the Strait of Hormuz is disrupted and oil prices skyrocket in the international market, China will make a fortune selling this oil.
Alarm bells for India, how will it hit the pocket?
This entire turmoil is a major warning for India. In the previous trading session, Brent crude prices rose $2.03 (2.87%) to close at $72.87 per barrel. If the Strait of Hormuz closes and oil prices reach $95 to $110 per barrel, it will have a direct impact on the Indian economy.