Sunday was a great day for Iran. With international nuclear sanctions lifted, the country is poised to step on the gas of economic development. But the good news is not for Iran alone; it is for India, too.
With the sanctions lifted, India will be able to resume its import of oil from Iran. This comes at a time when New Delhi has set ambitious plans and policies for the growth of the country.
REUTERS/RUPAK DE CHOWDHURI/FILES
What makes things better for India is the fact that oil prices are going to further come down because of Iran contributing to the rise in supply of oil.
Iran is expected to increase its export of 1.1 million barrels of oil per day by 500,000 soon, followed by a further 500,000 bpd thereafter.
On Friday, global oil prices started showing the declining trend. UK Brent crude closed Friday trade below $29 a barrel. Crude oil prices in India closed at $26.43 a barrel – a historic low. On Monday, the price opened at 1983 but was trading at 1971, at a 1.25 per cent low.
Lifting of Iran sanctions has also affected Organisation of Petroleum Exporting Countries (OPEC), the daily basket of thirteen crude stood at $24.74 a barrel on Friday
as against $25 the previous day. Head of commodities research at Commerzbank, Eugen Weinberg, said, “The current stance of the oil market should be a boon for the economies (of oil consuming countries) and the financial markets, not a bust.” Commenting on how Iran might distribute its exports, FG Energy chairman Fereidun Fesharaki said that more than half of Iranian oil will not flow into Asia.
“We can identify, Greece, Spain and Italy for around 200,000 barrels a day, then Turkey and South Africa for around 150,000 barrels a day; Korea, India and Sri Lanka and some others for the rest.”
This means that the lifting of sanctions are going to benefit European economies to a great extent.
But India is a prime market for Iran due to the former’s growing crude demand. According to reports, Tehran is looking at almost doubling its oil exports to India.
Currently Iran ships 260,000 bpd under sanctions’ restrictions. India needs to import around eighty per cent of its oil. New Delhi has been looking into increasing its oil import from African countries. In 2014-15, the country imported 32 million tonnes (mt) of crude from the African nations, including 2.2mt from Nigeria. India imports about 189mt of crude annually.
Petroleum minister Dharmendra Pradhan said that India “would increase imports from Africa, mainly from Nigeria”, which is the largest exporter of crude to India from Africa. As part of this strategy, New Delhi is hosting the fourth India-Africa hydrocarbon conference. Africa has 14.5 per cent of all proven accessible oil reserves and 13.2 per cent of accessible gas reserves.