{"id":21487,"date":"2026-08-03T07:10:30","date_gmt":"2026-08-03T01:25:30","guid":{"rendered":"https:\/\/eng.dragonmedia.com.np\/?p=21487"},"modified":"2026-08-03T07:10:30","modified_gmt":"2026-08-03T01:25:30","slug":"uncertainty-over-hormuz-and-nepals-energy-security-military-action-paused-risks-remain","status":"publish","type":"post","link":"https:\/\/eng.dragonmedia.com.np\/?p=21487","title":{"rendered":"Uncertainty over Hormuz and Nepal\u2019s Energy Security: Military Action Paused, Risks Remain<\/strong>"},"content":{"rendered":"

Although fresh military action between the United States and Iran in West Asia is said to have been suspended for the time being, this should not be interpreted as evidence of lasting peace or a return to normal conditions in global energy markets. The parties involved continue to make contradictory claims regarding a possible agreement, the operation of the Strait of Hormuz and Iran\u2019s nuclear programme. Military forces remain on high alert, diplomatic missions are advising citizens to prepare for emergency departure, and airlines are adjusting their schedules in response to regional risks. Military action may have been postponed, but the danger has not disappeared.<\/p>\n

For Nepal, this is not a distant geopolitical confrontation. Every disruption in the Strait of Hormuz eventually affects transportation, industry, agriculture, construction, tourism, food prices, foreign-exchange expenditure and household kitchens in Nepal. The country does not produce petroleum. According to Nepal Oil Corporation, all petrol, diesel, kerosene, aviation fuel and cooking gas consumed in the country are imported. Although supplies arrive directly through India, prices are influenced by international oil markets, transportation costs, exchange rates and regional supply conditions.<\/p>\n

Nepal therefore cannot afford to remain a passive observer whenever tensions rise around Hormuz. This is a matter directly connected with national energy security, economic stability and continuity of supply.<\/p>\n

Nepal Rastra Bank\u2019s July 2026 macroeconomic report noted that energy disruptions caused by the conflict in West Asia had slowed global growth, increased inflation and placed pressure on supply chains. According to the report, crude-oil prices rose above 100 US dollars per barrel when tensions escalated. Diesel prices increased even more sharply, producing secondary effects on transportation and production costs.<\/p>\n

In Nepal, inflation also rose again to 5.04 percent in May 2026 because of higher energy and food prices, according to the central bank. The report concluded that rapid adjustments in domestic petroleum prices in line with international crude-oil prices had transmitted the impact from transportation to other sectors. Although the higher oil-import bill caused by tensions in West Asia has not yet placed severe pressure on foreign-exchange reserves because of strong remittance inflows, remittances can only conceal the impact of the crisis; they cannot resolve Nepal\u2019s energy dependence.<\/p>\n

The central bank\u2019s inflation projection was based on expectations of diplomatic progress, restoration of peace in West Asia and a decline in crude-oil prices. The renewed possibility of military threats and attacks could weaken the very assumptions on which that projection was built. The government must therefore include the possibility of serious supply disruption, rather than relying only on normal oil prices, when projecting inflation, economic growth and revenue for the coming year.<\/p>\n

Seven OPEC+ countries have decided to increase production by 188,000 barrels per day in September compared with August levels. The decision may provide some psychological reassurance to the market. However, it would be unrealistic to expect such an increase to compensate for a major disruption in the Strait of Hormuz. Increasing production and transporting that production safely to international markets are two different matters. Even when oil remains available, insecurity along maritime routes can sharply increase shipping, insurance and delivery costs.<\/p>\n

The first effects of a Hormuz crisis appear even before ships are completely halted. As risks rise, maritime insurance becomes more expensive, vessels seek alternative routes, transport times lengthen and traders raise prices in anticipation of shortages. As a landlocked and import-dependent country, Nepal faces several layers of risk involving international prices, Indian refining and supply systems, cross-border transportation and domestic distribution.<\/p>\n

This situation demonstrates that Nepal Oil Corporation cannot remain merely an institution that purchases petroleum, sells it and adjusts prices. It must function as the principal implementing institution for national energy-supply security. The corporation lists Nepal\u2019s total petroleum storage capacity at 102,305 kilolitres. But total capacity on paper cannot automatically be treated as a strategic reserve. The volume of the tanks, the actual stock held in them, the availability of individual petroleum products, provincial distribution and the number of days of national consumption they can sustain are separate issues.<\/p>\n

The government must establish clear national standards for the actual reserves of petrol, diesel, aviation fuel and cooking gas, and for the period during which those reserves can sustain the country in an emergency. A priority-distribution plan should already be in place for hospitals, security agencies, fire services, ambulances, food transportation, emergency electricity systems and disaster management. Issuing orders only after a crisis has begun is not sufficient.<\/p>\n

Nepal\u2019s energy security should not depend solely on the continuation of supply arrangements with India. India is Nepal\u2019s most important and practical supply partner. However, when the global oil market faces a major shock, India itself comes under pressure from prices, refining constraints, transportation costs and domestic demand. Nepal therefore needs to develop long-term supply agreements, pipeline expansion, provincial storage facilities, alternative entry routes and emergency coordination mechanisms as parts of a single integrated strategy.<\/p>\n

Transparency and safety are equally important when expanding petroleum-storage facilities. In the past, questions were raised over land purchases and project management conducted in the name of storage expansion. Future expansion must not become another vehicle for political influence, commissions or the acquisition of unsuitable land. Locations should be selected through technical studies based on geographical risk, market access, pipeline feasibility, environmental safety and disaster preparedness.<\/p>\n

The solution to an energy crisis does not lie only in storing more petroleum. Nepal has enormous domestic hydropower potential and growing electricity generation during the rainy season. Yet transportation, industry, household cooking and freight systems remain excessively dependent on imported petroleum. Failing to use domestically generated electricity to replace petroleum throughout the economy is a major policy contradiction.<\/p>\n

The rise in electric private vehicles is a positive development, but the energy transition should not remain confined to private cars. Nepal needs a clear programme to electrify public buses, school transport, government vehicles, taxis, short-distance freight vehicles and urban distribution systems. Electric public transport in cities and the gradual expansion of electric freight systems on long-distance routes could significantly reduce the economy-wide impact of oil-price increases.<\/p>\n

Expanding electric cooking and the use of safe electrical appliances in households can reduce dependence on cooking gas. But the transition cannot be achieved merely by distributing appliances. Reliable electricity, appropriate tariffs, improved household wiring, local maintenance services and consumer confidence are all necessary. A portion of the indirect subsidies currently provided for cooking gas could be redirected towards targeted investment in electric-cooking infrastructure.<\/p>\n

The government collects substantial taxes and charges under different headings from petroleum products. Citizens bear an additional burden whenever prices rise during an energy crisis, but it remains unclear how much of that revenue is invested in energy security, strategic reserves, public-transport electrification and price stabilisation. Treating petroleum taxation merely as an easy source of general revenue is not justifiable in the long term. A fixed portion of such revenue should be compulsorily allocated to an energy-transition and emergency-security fund.<\/p>\n

Reliable information is as important as physical reserves in crisis management. When rumours of supply disruption spread, consumers begin hoarding, queues form at petrol stations, black-market activity emerges and even adequate reserves begin to appear insufficient. Nepal Oil Corporation should regularly publish verified information on petroleum stocks, daily imports, distribution and potential risks. Withholding information does not enhance security; it creates distrust.<\/p>\n

Nepal should maintain an independent and balanced diplomatic policy that calls on all parties in West Asia to exercise restraint, prioritise dialogue and respect international law. The safe operation of the Strait of Hormuz is linked to the shared interests of global trade and energy supply. Interference in any country\u2019s sovereignty or the use of military pressure cannot provide a lasting solution. At the same time, placing commercial shipping at indefinite risk would disproportionately harm developing countries that depend on imported oil.<\/p>\n

Speaking in favour of peace is not only Nepal\u2019s moral responsibility; it is also an economic necessity. People in West Asia pay for every attack with their lives and security, while citizens in countries such as Nepal pay through inflation, unemployment and declining purchasing power.<\/p>\n

The latest uncertainty surrounding Hormuz has again delivered a warning to Nepal. The government cannot formulate energy policy on the basis of predictions about whether war will or will not occur. The country needs reserves capable of withstanding a possible crisis, reliable supply arrangements, transparent distribution, a price-stabilisation mechanism, wider use of domestic electricity and a time-bound plan to reduce petroleum dependence.<\/p>\n

Waiting for a geopolitical crisis to occur, raising prices, asking citizens to exercise restraint and then forgetting the problem a few days later does not constitute energy security. Real national preparedness means developing alternatives before a crisis, protecting essential services and gradually replacing imported fuel with domestically generated electricity.<\/p>\n

Military action may have been suspended for now, but Nepal\u2019s energy risk remains. The central question is no longer merely whether the Strait of Hormuz will remain open or be closed. The real question is whether Nepal will continue absorbing every external shock or begin building a strong foundation for its own energy security.<\/p>\n

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