Is this the end of India-Iran energy relations?
Following the Trump administration's Monday campaign that the United States would not renew its six-month exemptions to third-party countries for their continued purchase of Iranian oil, India has been in an extremely difficult position and it is still not clear which way the nation will go. Will India believe in US sanctions and continue to import Iranian oil, or will the nation's leaders be willing to lose their third largest raw supplier to maintain a good relationship with the United States?
India is the third largest oil consumer in the world, and nearly 80 percent of its oil consumption is met with imported oil. India is also the second largest buyer of Iranian oil, after China. All this is to say that the loss of Iranian oil due to sanctions would be a big blow to the rapidly developing subcontinent. India was one of eight countries that have been abused to continue importing Iranian oil (although in smaller quantities) for a six-month grace period. This period ends May 1[ads1], leaving India (not to mention China, Japan, South Korea, Taiwan, Turkey, Italy and Greece).
There has been great speculation as to which approach India will take, with plenty of OP-eds claiming to oppose the United States and probably claim the opposite, that they will fill out the Iranian crude oil supply from other oil-producing nations . Now, India's oil and natural gas minister Dharmendra Pradhan has given us a clue as to which way the Indian subcontinent leaned.
Pradhan took on Twitter on Tuesday to announce that India will fill the gaps left by Iranian oil with imports from other major oil-producing nations, saying that "Indian refineries are fully prepared to meet the national demand for gasoline, diesel and other petroleum products. " According to Reuters reporting, Indian refineries are already planning to increase imports from nations included in the Petroleum Exporting Organization (OPEC), as well as from Mexico and the United States.
On Monday, when the Trump administration announced that the Iranian oil conditions would not be renewed, the president said that Saudi Arabia's crude oil supplies and its other OPEC nations were prepared and able to "more than make up" for supply losses due to US imposed Iranian oil sanctions. Saudi Arabia, for its part, said it would establish a strategy in coordination with other oil-producing countries to ensure that they would produce enough crude oil to meet new-found demand, and to maintain a balanced global market. [19659002] Related: Trump & # 39; s Executive Order is an old-fashioned oil broker
India is already well on its way to buckling Iranian oil completely thanks to the terms of the Six-month deduction was given by the United States in November 2018, which required recipients to deprive highly reduced amounts of Iranian oil (the divisions are officially called significant reduction studies). India had already almost halved its Iranian oil imports during this period.
However, many energy researchers do not remain convinced that the US decision – which surprised many market insiders and pushed up raw trade prices when the decision was announced Monday – would be able to unilaterally cut Iran out of the international oil market. Chinese authorities have already publicly expressed their disgust at the decision, and some analysts believe China may even increase imports from Iran as opposed to US politics. Bjarne Schieldrop, analyst at chief commodities at SEB, said on Tuesday: "We believe that China cannot and will not go down this time, and we could easily see an increase in Chinese oil imports from Iran up to perhaps 1 million bpd." [19659002] In the case of India, analysts believe that this will not be the end of Iranian imports. In a note published Monday, the same day as Trump's announcement, analysts at Eurasia Group said that "New Delhi will cut imports significantly, but probably maintain about 100,000 bpd of Iranian imports paid to use a rupee payment system. This is less An energy decision decision than a political […] India has worked hard to diversify its energy sources significantly in preparation for this situation in recent months, but India's ties with Iran are significant and historic, and New Delhi will work hard to maintain some links. "
By Haley Zaremba for Oilprice.com
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