President Donald Trump.  (AP)
President Donald Trump. (AP)

Energy markets jittery as US plans to deploy missile battery, radars to Saudi

  • US has also issued additional forces on Prepare To Deploy Orders (PTDO) for two Patriot Batteries and a Terminal High Altitude Area Defense system (THAAD)
  • US on Wednesday also imposed sanctions on Chinese firms and individuals for transporting Iranian oil

New Delhi: In what may exacerbate the tensions in the Persian Gulf and add to the growing uncertainities in global energy markets, the Donald Trump administration plans to deploy an additional patriot missile battery, four sentinel RADARS and additional personnel to Saudi Arabia.

These deployments come in the backdrop of US secretary of state Michael Richard Pompeo’s recent visit to Jeddah, Saudi Arabia and Abu Dhabi, United Arab Emirates, following the 14 September drone attacks on Saudi Arabian Oil Company or Saudi Aramco’s facilities that caused the biggest ever-disruption in global crude oil supplies. Global shipping transportation prices have increased substantially post the developments in West Asia.

Consequently, the automobile fuel prices in India have been rising.

Meanwhile, the US has also issued additional forces on Prepare To Deploy Orders (PTDO) for two Patriot Batteries and a Terminal High Altitude Area Defense system (THAAD). A combination of Patriot and THAAD batteries can help neutralise incoming targets in mid-flight.

“So let’s say that if there are more Saudi assets and our assets pointed north, that would be a good thing that will better protect Saudi Arabia. Right now, and because of recent months and years, understandably, Saudi assets were pointed mostly toward the south. So more assets will enable them to have better coverage necessarily," a senior US State Department Official said on Friday while briefing reporters.

The unfolding events have raised the spectre of a spike in transportation fuel prices in India, with traders worldwide speculating if oil prices will cross the $100-mark yet again. Any sudden increase in global prices will affect India’s oil import bill and its trade deficit.

Every dollar increase in the price of oil raises India’s import bill by Rs10,700 crore on an annualised basis. India spent $111.9 billion on crude oil imports of 207.3 million tonnes in 2018-19.

A record gain in crude oil prices could also aggravate India’s fiscal situation and make it tougher for the government and the central bank to effectively combat a slowdown in economic growth. India is particularly vulnerable as it imports more than 80% of its oil requirements and around 48% of natural gas.

There has been an escalation in global hostilities with the Trump administration restricting entry into the US “for senior Iranian government officials and members of their families."

The US on Wednesday also imposed sanctions on Chinese firms and individuals for transporting Iranian oil. These firms are - China Concord Petroleum Co., Limited, Kunlun Shipping Company Limited, Pegasus 88 Limited, and COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co, Ltd.

“The United States is imposing additional sanctions on the following two Chinese companies, which own or control one or more of the four companies identified above, and had knowledge of their sanctionable conduct: Kunlun Holding Company Ltd. and COSCO Shipping Tanker (Dalian) Co., Ltd," the US state department said in a statement.

Tensions have been escalating in the region due to events such as an alleged attack by Iran on oil tankers in international waterways, with a fifth of global oil supplies passing through the strategic Strait of Hormuz. US has also alleged that Iran shot down an American UAV and was behind the drone attacks on Saudi Aramco.

“All nations have a duty to act. No responsible government should subsidize Iran’s bloodlust," Donald J. Trump said at the 74th Session of the United Nations General Assembly on Wednesday.

The National Democratic Alliance (NDA) government has also been holding conversations with the Trump administration on the issue of energy imports from sanctions hit Iran.

The cost of the Indian basket of crude, which averaged $47.56 and $56.43 a barrel in FY17 and FY18, respectively, was at $59.35 in August, according to data from the Petroleum Planning and Analysis Cell. The average price jumped to $63.61 a barrel on 24 September. The Indian basket of crude represents the average of Oman, Dubai and Brent Crude.

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