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Before the Red Sea security crisis, India’s fuel exports to Europe depended almost entirely on the Red Sea-Suez Canal route.
- India emerged as a major fuel supplier to Europe after the Russia-Ukraine conflict and the follow-up Western countries' sanctions on Russia.
- The Suez Canal is the shortest maritime route between Asia and Europe. It usually accounts for about 12-15% of global maritime trade (UNCTAD).
Need for Shifting Route
- Attacks from Houthis: Iran-backed Houthi rebels of Yemen attacking ships around the Bab el-Mandeb strait (choke point), which leads to Red Sea and Suez Canal.
- Israel-Hamas conflict: Growing concerns over the possibility of the Israel-Hamas conflict developing into a wider Middle Eastern crisis
Consequences of Shifting Route
- Decline in Supply to Europe: India’s petroleum fuel exports to Europe in recent months have edged lower.
- Shipping time for trade via Cape of Good Hope is around 2 weeks more and it also raises container freight rates by over 30%.
- Diversification of Export Destination: India’s overall fuel exports are stable with increased dispatches to Asian markets and Australia offsetting the decline in supplies to Europe.
