How India plans to secure its oil supplies
What's the story
India and other oil-importing countries are likely to negotiate bilateral agreements for energy supplies, possibly through coordinated transit corridors. This is according to a report by Moody's Ratings. The report also highlights that a swift conflict resolution between the US and Iran, along with the complete reopening of the Strait of Hormuz, is unlikely in the near future.
Transit corridors
Energy transit flows will gradually improve
The report from Moody's suggests that energy transit flows will gradually improve, but through bilateral channels instead of a general reopening. This would enable some incremental improvement in energy transit flows from the near-zero levels at present. However, the process is expected to be slow, opaque, and prone to interruptions.
Negotiation prospects
Oil importers to negotiate passage bilaterally with Iran
Moody's anticipates that oil importers, especially China, India, Japan, and South Korea, will negotiate passage bilaterally with Iran. This could be done via coordinated transit corridors such as those reportedly emerging near Larak Island and through Omani territorial waters. The report emphasizes that a return to pre-conflict traffic volumes in 2026 is unlikely.
Market outlook
Brent crude prices projected at $90-110/barrel
Even if safe passage through the Strait is restored in six months, Moody's predicts that the oil market will remain supply-constrained. This would lead to persistently higher and more volatile energy prices, with broader knock-on effects on costs, demand, and the financing conditions for exposed borrowers. The report projects Brent crude prices in the $90-110/barrel range for much of this year.