- Venezuela earthquake caused 235 deaths, over 4,300 injuries.
- India has been rapidly expanding crude oil imports from Venezuela.
- No immediate petrol price hike is expected in India.
Venezuela Earthquake: The death toll in Venezuela has risen to 235, while more than 4,300 people have been injured after two powerful earthquakes measuring 7.2 and 7.5 magnitude struck within a minute of each other on Wednesday. Beyond the crisis, the disaster has also sparked concerns over India's rapidly expanding crude oil imports from the nation and whether it could trigger petrol and diesel prices.
How can an earthquake 14,000 km away affect petrol prices in India?
The devastating earthquakes have come at a time when India has significantly increased crude oil imports from Venezuela amid tensions in the Middle East and disruptions in the Strait of Hormuz. Although the recent US-Iran peace agreement signed on June 17 had raised hopes of smoother oil supplies through the crucial shipping route, the earthquake in Venezuela could create a fresh challenge for many countries.
While the country's key oil export terminals have reportedly escaped major damage, widespread power outages, damage to roads and transport networks, and emergency restrictions at ports are likely to affect cargo movement. Venezuela's major cargo port, La Guaira, has been declared a disaster zone, raising concerns over shipping operations and possible delays in crude exports.
Recommended For You
Hence, any disruption to Venezuela's oil export infrastructure could possibly see slow crude shipments to India for days or even weeks.
Will petrol and diesel prices increase?
The answer is no. The earthquake is not expected to trigger an immediate increase in petrol and diesel prices in India. However, shipping delays could force vessels to wait longer before loading cargo, leading to higher delay penalties and increased transportation costs.
According to Kunal Khanna, Managing Director and Global Head of Natural Resources at EDME Insurance Brokers Ltd, shipping delays, along with higher vessel charter rates and insurance premiums, could raise the overall cost of transporting crude oil. These additional costs are likely to be made by traders, refineries, and insurance companies rather than being immediately passed on to consumers.
However, if the disruption caused by the earthquake persists for an extended period, Indian refineries may have to look for alternative sources or shipping routes, which could increase procurement costs in the long run.