Relevance: GS II (International Relations) & GS III (Economy & Energy Security) | Source: The Hindu

1. What is the News? 

• The ongoing war in West Asia (between the US, Israel, and Iran) has made global sea routes very dangerous for oil ships.
• However, India is successfully using careful diplomacy to keep its oil and cooking gas supplies safe without taking sides in the war.

2. How India Got ‘Safe Passage’

• The Danger Zone: The Strait of Hormuz is a narrow sea route where most of the world’s oil passes. Because of the war, traffic there has dropped.
• The Favour: Iran recently announced it will give safe passage to ships from five “friendly nations,” and India is on that list.
• Why did India get this favour? When a US submarine attacked an Iranian ship recently, India and Sri Lanka quietly allowed other Iranian naval ships to park safely in their ports (Kochi in India and Trincomalee in Sri Lanka) to protect them.
• The Lesson (Strategic Autonomy): This is a perfect example of India’s smart foreign policy. India kept its friendship with the US, but also helped Iran just enough to make sure our own oil ships are not attacked.

3. Trading in Rupees

• The Problem: Global oil prices are very high. At the same time, the Indian Rupee is weak. Buying expensive oil using US Dollars is draining India’s wealth.
• The Smart Move: To fix this, India is experimenting with buying oil from Gulf countries—specifically the GCC (Gulf Cooperation Council)—using local currencies (like the Rupee) instead of the US Dollar.
• The Benefit: This saves India massive currency conversion fees and protects our foreign exchange reserves. This strategy of moving away from the dollar is called De-dollarization.

4. Are We Running Out of Fuel?

To stop people from panicking, the Petroleum Ministry shared some good news:

• Safe Buffer: India currently has enough crude oil, petrol, and diesel in reserve to last for 60 days. We also have a solid one-month backup of LPG (cooking gas).
• Producing at Home: Indian refineries have worked hard and increased domestic LPG production by a massive 40%.
• Free Port Entry: To encourage foreign oil ships to keep coming to India despite the war risks, authorities like the New Mangalore Port have made port entry completely free for crude oil and LPG ships.

The “UPSC Trap”

• The “GCC Membership” Trap: UPSC will try to trick you by saying that Iran and Iraq are members of the GCC because they are major oil producers. Incorrect. The GCC only consists of six specific Arab states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE). It strictly excludes Iran and Iraq.
• The “Geography” Trap: A statement might say the Strait of Hormuz connects the Red Sea to the Mediterranean Sea. Incorrect. It connects the Persian Gulf to the Gulf of Oman (which leads to the Arabian Sea).

UPSC Value Box

With reference to the geopolitics of West Asia and international trade, consider the following statements:

1. The Strait of Hormuz is a critical maritime chokepoint that connects the Persian Gulf to the Gulf of Oman.
2. Both Iran and Iraq are founding members of the Gulf Cooperation Council (GCC).
3. Settling international crude oil trade in the Indian Rupee rather than the US Dollar is a step towards de-dollarization.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Correct Answer: (c)