An uneasy truce between Iran-Israel may be best-case scenario: Vandana Hari

True rapprochement between Israel and Iran remains elusive, complicated further by the Gaza conflict that has pitted Israel against Iran-backed groups like the Houthis, Hamas, and Hezbollah, says Hari

The conflict in West Asia has roiled Asian economies, especially India, and added fresh strain to domestic refiners. Against this backdrop, Singapore-based energy expert Vandana Hari, founder of Vanda Insights, speaks with S Dinakar via email, shedding light on India’s oil and gas options amid a tentative ceasefire in the ongoing Iran-Israel-US war. Edited excerpts:

 

How do you see the West Asian situation evolving with a delicate ceasefire in place?

 

It’s likely to be an uneasy calm, at least for the next few days — ceasefires are often fragile. Yet this one offers a sliver of cautious optimism, especially as US President Donald Trump has staked his credibility on ending the 12-day war. Should the truce collapse, a strong US response would almost certainly follow. The deeper challenge, however, is achieving lasting peace.

 

True rapprochement between Israel and Iran remains elusive, complicated further by the Gaza conflict that has pitted Israel against Iran-backed groups like the Houthis, Hamas, and Hezbollah. An interim agreement may be possible via a new US–Iran nuclear deal, but Tehran’s insistence on continuing uranium enrichment will remain a major sticking point.

 

Do you foresee a permanent solution, or is this merely a lull given the stances of Israeli Prime Minister Netanyahu and Iranian Supreme Leader Ali Khamenei?

 

A lasting rapprochement between Israel and Iran seems out of reach for the foreseeable future. The best-case scenario for the world might be an uneasy truce. 

 

What options does India have if future conflicts in West Asia or the Strait of Hormuz affect oil supply? What compromises must Indian refiners make?

 

India needs to expedite its strategic oil storage programme — a prudent target being enough crude stockpile to cover at least two months of domestic consumption. While I consider an Iranian threat to block the Strait of Hormuz highly unlikely, any such move would trigger a global supply shock.

 

India wouldn’t be alone in grappling with its fallout, and Iran itself would struggle to withstand the collective international community backlash. The best insurance for Indian refiners lies in diversifying their crude suppliers. They can also work with West Asian suppliers to explore alternative shipping routes that bypass the vulnerable chokepoint of the Persian Gulf.

 

How do you assess oil prices for this year? Will the $65 range still hold, or do you expect a shift? Will volatility intensify?

 

I expect Brent crude to average in the high-$60s throughout the second half of the year. In an environment defined by economic and geopolitical uncertainty, it’s too early for precise forecasts. Much hinges on how US tariff negotiations deliver and the new global economic regime takes shape.

 

The Trump administration is likely to steer clear of the worst-case scenario — punitive “Liberation Day” tariffs — but duties on most trading partners will probably settle well above pre-2024 levels. That points to economic headwinds and decelerating global oil demand growth. Crude oil prices will continue to fluctuate, though within a narrower band, unless fresh geopolitical shocks arise. 

 

India is expected to be the biggest contributor to global oil demand and the last to move away from fossil fuels. What insurance should it build in? What priorities must it work on in the medium term? 

Oil stockpiles and a geographically diversified slate of crude oil suppliers remain the best safeguards against unexpected, large-scale supply disruptions.

 

China appears more secure. Is that due to its massive storage capacity?

 

China does have the comfort of a substantial buffer of strategic and commercial oil reserves. Its total inventories are estimated at roughly 1.3 billion barrels — enough to cover about 118 days of imports.