Following a high-level meeting on Tuesday, April 29, with the chiefs of armed forces, the national security advisor, the Home Minister, and the Defence Minister, Indian Prime Minister Modi has reportedly delegated decision-making authority to the tri-services. They have been granted the autonomy to locate and neutralize those responsible for the deaths of 65 tourists in Kashmir last week.
This delegation of authority echoes a similar instance in 2019, when, after a suicide bombing killed over 40 Indian soldiers, Prime Minister Modi instructed the forces to take necessary action. At that time, Imran Khan, the former cricketer who transitioned into politics, was the Prime Minister of Pakistan.
Subsequently, India conducted an incursion into Pakistani territory but lost a fighter jet in the process. Although the pilot ejected safely and was later returned unharmed following diplomatic intervention, the confrontation de-escalated with both nations claiming victory.
Following Prime Minister Modi's meeting, Pakistan's Information Minister posted on X, stating that the country anticipates an Indian attack within the next 24 to 36 hours and affirmed Pakistan's readiness to retaliate in kind.
Regarding the energy markets, while neither India nor Pakistan are major oil producers, they are crucial nodes in several significant supply chains. Furthermore, the ports of Mumbai and Karachi are vital for the distribution of goods to Europe, South Asia, and Africa. A significant military confrontation could potentially disrupt these strategic trade routes in the event of major escalation.
As of 17:00 GMT, the prices of WTI and Brent recorded modest movements, without overly being subjected to the current sentiments:
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Disruption to oil flow could trigger substantial price increases, subsequently fueling inflation and hindering economic growth beyond the South Asian region.
Conversely, progress in discussions between Iran and the United States towards an amicable resolution of the nuclear issue could positively impact global oil supply. Currently, Iran's supply is limited due to underinvestment and stringent international sanctions. Should these sanctions be lifted, estimates suggest Iran could potentially produce at least 3.8 million barrels per day.
Despite optimistic signals from both the US and Iran, significant hurdles remain in the next phase of technical-level discussions. A key sticking point is the issue of uranium enrichment for power generation. If the US continues to insist that Iran cannot enrich uranium to the 3.67% concentration required for power plants domestically, it could jeopardize the talks.
Meanwhile, the current US administration has reportedly set a 60-day deadline to achieve a deal, aiming to avert potential military action against Iranian nuclear sites.
Consequently, the unfolding situation between India and Pakistan, alongside the outcome of the US-Iran talks, are poised to significantly influence global energy prices and, by extension, the health of the global economy.
