Goldman Sachs Warns of Rising Oil Shortage Fears: Implications for Asia and India

Global Crude Oil Markets Under Pressure Amid Rising Prices and Supply Uncertainty

Global crude oil markets have come under pressure in recent months due to supply disruptions and distribution bottlenecks, driving up energy costs. The Iran war has further exacerbated the situation, with Brent crude futures increasing by $1.71, or 1.6%, to reach $110.74 per barrel. US West Texas Intermediate crude futures have also risen above $115 per barrel.

In India, crude oil prices on the Multi Commodity Exchange (MCX) have been trading marginally higher by 0.16% at ₹10,422 per barrel. This rise in prices, coupled with mounting supply uncertainty, has prompted global brokerage house Goldman Sachs to warn that Asia remains the most exposed region globally to a prolonged Persian Gulf supply disruption.

According to a report dated April 3, Goldman Sachs highlighted that Asia is already showing signs of stress in key fuel categories, particularly petrochemical feedstocks such as naphtha and LPG. The report noted that countries such as South Korea and Singapore are especially dependent on imports from the Persian Gulf, while India also stands out as materially exposed to disruptions in imports of jet fuel, fuel oil, and naphtha.

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Table: Country-Product Analysis by Goldman Sachs

The report highlighted that countries with larger strategic reserves, such as China and Japan, may be better positioned to absorb the hit. However, Goldman Sachs warned that Asia's net oil imports have fallen sharply by the end of March, signalling that the impact from lower crude flows is intensifying.

For India, the message from Goldman Sachs is that the country is not yet facing an outright nationwide fuel collapse, but it is entering a more fragile supply environment where product-specific shortages, higher import costs, and pressure on industrial fuel availability could become more visible if the Strait of Hormuz remains disrupted for longer. India's large refining system and policy flexibility may help soften the blow, but its reliance on Persian Gulf-linked flows still leaves it exposed to prolonged instability.

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According to Goldman Sachs' country-product analysis, India could see a 34% average decline in local product supply from current Persian Gulf export disruptions after accounting for import and export adjustments, but before using domestic storage buffers. The report also pointed out that India's vulnerability is not evenly spread across products, with a 76% hit to jet fuel supply, a 55% impact on fuel oil, and a 43% impact on naphtha under its stress analysis.

The report noted that India has relatively modest domestic storage buffers compared with some larger Asian peers, with around 20 days of crude stocks and 16 days of refined products stocks available. Oil price rally has also started to reflect these stress points, with diesel and jet fuel seeing the sharpest rally globally, with average increases of roughly $130–140 per barrel, or about 150%, since late February.