India on Friday signed a strategic agreement with the United Arab Emirates to receive liquefied petroleum gas from the UAE, as well as a Memorandum of Understanding (MoU) on strategic petroleum reserves.
India, which uses LPG as its the main cooking fuel and has felt shortages since the Iran war choked supplies at the Strait of Hormuz, seeks to boost its supply agreements.
Indian Prime Minister Narendra Modi signed the LPG supply deal and the strategic reserves pact during a quick two-hour visit to the UAE today, as India scrambles to ease energy supply pressures that are already hitting the economy.
The pact was signed hours after Indian state refiners raised their retail prices for gasoline and diesel for the first fuel price hike in India in four years. The hike amounts to over 3% and was necessitated by the global crude oil price surge that resulted in losses for India’s refiners.
Still, New Delhi put off the price hike for much longer than other governments, due to the sensitivity of Indian consumers to such hikes.
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Economic pain is intensifying for India every day that the Strait of Hormuz remains closed.
Modi this weekend urged Indians to curb gasoline and diesel consumption, use public transportation where possible, and car pool as much as possible.
“Measures such these will help the nation conserve energy, save on the energy import bill and overcome the challenges arising out of the serious military conflict involving many energy producing nations,” Oil Minister Hardeep Singh Puri said.
Some LPG tankers have passed through the Strait of Hormuz since the war began, including one that exited the chokepoint for the first time since the U.S. blockade was placed mid-April.
Meanwhile, India is paying higher prices for LPG imports from elsewhere, as well as higher prices for crude oil that doesn’t need to pass through the Strait of Hormuz, pressuring the current account and foreign reserves.
By Tsvetana Paraskova for Oilprice.com
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