What has happened
The months-long tension across West Asia finally appears to be easing. The United States and Iran have agreed to enter peace talks, and as part of that understanding both sides have consented to immediately reopen the Hormuz Strait, one of the busiest shipping lanes in the world. President Donald Trump himself confirmed that the draft of the peace proposal will be formally signed in Geneva this coming Friday.
Because of the blockade at Hormuz, a large number of vessels from around the world are stuck on both sides of the chokepoint — the Persian Gulf and the Gulf of Oman. These tankers are loaded with LPG and oil along with other cargo, and there are fears that some Indian tankers are among them. Crude oil prices have already dipped since news of the deal broke, fuelling expectations that everything from LPG to petrol and diesel could eventually become cheaper.
Why Hormuz matters so much for India
The Hormuz Strait is regarded as the lifeline of global energy supply, and it carries added weight for India because a large share of the country's crude oil imports passes through this region. That is precisely why, the moment the situation in the Gulf began to deteriorate, the Indian government moved to protect its maritime and energy interests.
On 31 May the central government had said it was rolling out a high-priority operation to safely evacuate 13 Indian-flagged vessels present in the Hormuz Strait. The step came at a time when the security situation in the area was growing steadily more complicated. Now, with the peace deal agreed, the world's attention is fixed on this critical waterway.
The 14 key points of the US-Iran peace deal
- A permanent and immediate end to the war on all fronts, including Lebanon.
- A US commitment that it will not interfere in Iran's internal affairs and will respect the sovereignty of the Islamic Republic of Iran.
- The naval blockade to be completely lifted within 30 days.
- A US commitment to withdraw its military presence from the areas surrounding Iran.
- Reopening the Hormuz Strait within 30 days under arrangements decided by Iran.
- Suspending the sanctions on Iranian oil, petrochemical products and their by-products, and ensuring Iran full access to the revenue from them.
- The US and its allied nations to present a plan of at least $300 billion for Iran's reconstruction.
- Negotiations to run for 60 days for a final agreement on nuclear issues and sanctions.
- Iran to reaffirm its commitment under the Nuclear Non-Proliferation Treaty (NPT) not to develop nuclear weapons.
- A US pledge not to send additional military force to the region and not to impose new sanctions during the negotiation period.
- A phased release of Iran's $24 billion in frozen assets.
- Setting up a monitoring mechanism to oversee implementation of the agreement.
- Endorsing the final agreement through a UN Security Council resolution.
- The final talks to begin only once half of Iran's frozen assets are released, the oil sanctions are suspended and the naval blockade is removed.
Which Indian vessels are stuck
Opesh Kumar Sharma, Director in the Ministry of Ports, Shipping and Waterways, had said the ministry, working with various agencies, had drawn up a coordinated plan to safeguard Indian vessels. According to him, by the end of May there were a total of 13 Indian-flagged ships in the Hormuz Strait region. These include one LPG tanker, five crude oil tankers, one chemical or product tanker, three container ships, two bulk carriers and one dredger. The government had described getting all of these vessels out of the area safely as its top priority.
What the Shipping Ministry put in place
Given the maritime security risks, the agencies concerned are monitoring the situation around the clock. The ministry also said its officials are in constant coordination with Indian missions and maritime stakeholders so that the welfare of Indian seafarers is ensured and shipping operations continue without disruption. The emergency control room set up by the Directorate General of Shipping (DG Shipping) remains active, and since its establishment it had received more than 10,800 phone calls and over 24,000 emails by the end of May.
Will fuel really get cheaper
If the stranded tankers reach India safely and the reopening of Hormuz smooths supply, there is room for LPG, petrol and diesel prices to soften. Crude oil prices have already fallen following news of the deal. However, whether gas and oil actually become cheaper at the domestic level will ultimately depend on the government's decision.
