With global oil prices flaring due to widening conflict in the Middle East, India is watching the situation carefully and is confident of navigating any challenges it may pose, Oil Minister Hardeep Singh Puri said on Monday.International oil prices have flared to over USD 78 per barrel from about USD 70 per barrel, as the market waited to see if Israel would retaliate against Iran for a missile attack last week."We are watching the situation very very carefully," Puri said at ExxonMobil Global Outlook 2024 here.Energy availability, he said, can be affected if there is an escalation in the Middle East.

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But supplies are not impacted and India, the world's third largest oil consuming and importing nation, is confident of being able to navigate any situation."I am confident, we will be able to navigate as we did previously," he said.Puri said there is no shortage of oil and India is confident of sourcing its requirement.

After the Iranian missile attack, it is being speculated that Israel may target oil or nuclear facilities in Iran. And Tehran can choose to respond with either direct attack on Israel or shutting the Strait of Hormuz - the world's most important oil transit point, further flaring oil prices.

The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. A fifth of global oil flows from the Strait. Oil from all major oil producers - Saudi Arabia, Iraq, Kuwait and UAE - is exported via the Strait.Only Saudi Arabia and the United Arab Emirates (UAE) have operating pipelines that can circumvent the Strait of Hormuz.

Prior to the spike last year - the most since January 2023, there were hopes of a cut in petrol and diesel prices. The price of a basket of crude oil India imports had averaged USD 73.69 per barrel prior to in September, down from about USD 83-84 a barrel in March when petrol and diesel prices were last cut by Rs 2 per litre.

But the surge has now almost dashed such hopes.Asked about the possibility of the reduction, Puri said petrol and diesel are deregulated commodities and oil firms take pricing decisions.

"Keep your fingers and toes crossed," he said.

"We will monitor the situation carefully as we go forward."

Before the surge of last week, rating agency Icra had stated that there was a headroom to cut petrol and diesel prices by Rs 2-3 a litre.

This was based on a decline in the price of crude oil -- which is converted into fuels like petrol and diesel at refineries -- had rekindled hopes for a reduction in petrol and diesel rates that have been on a freeze for over two years now barring a pre-election reduction in March.

While petrol and diesel pricing is deregulated (meaning oil companies have the freedom to fix retail rates), the state-owned fuel retailers, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), have rarely used this freedom since late 2021 by not revising prices in line with cost.

They stopped daily price revision in early November 2021, when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had effected during the pandemic to take advantage of low oil prices.

The freeze continued into 2022 but the war-led spike in international oil prices prompted a Rs 10 a litre hike in petrol and diesel prices from mid-March 2022 before another round of excise duty cut rolled back all of the Rs 13 a litre and Rs 16 a litre increase in taxes on petrol and diesel done during the pandemic.

That followed the current price freeze which began on April 6, 2022, and continued till March 15 reduction.

Thereafter there has been a freeze in rates again.Petrol costs Rs 94.72 per litre in the national capital and diesel comes for Rs 87.62 a litre.