New Delhi, July 15 (G’nY News Service): Iran reached an agreement on its nuclear program with six other countries led by the U.S. on Tuesday. This development could undo a four decade long stand-off between Iran and the West.The agreement limits Iran’s nuclear program for a decade and puts in place a tighter procedure for inspection of Iran’s nuclear program. In return, the financial and military restrictions on Iran will be lifted.
What comes as a good news is that this agreement will benefit India greatly. India’s finances will improve greatly with the expected drop in oil prices. The rupee will become less volatile even as the U.S. Federal Reserve gets ready to tighten its fiscal policy.
Major Indian oil firms like ONGC and Oil India Limited could benefit greatly as Iran is likely to export more oil in an already surplus market. This will push the prices down even further.
Rahul Prithiani, director of CRISIL Research has said “Iranian production is expected to increase by close to 0.5 million barrels per day in six months which will result in a crude price impact of close to $3 per barrel. This, in turn, will lead to under recovery declining by Rs3600 crore and upstream company realizations will improve by Rs1200crore. There will be no impact on oil marketing companies.” [economictimes]
India had been importing 10% of its crude requirements from Iran with Essar Oil and Mangalore refinery. The imports had earlier been reduced due to the limitations imposed by the West.
An official from the Ministry of Petroleum & Natural Gas was quoted saying to the economic times “We will have to see the details of the deal before taking a view. There is no dearth of crude oil in the world. Iran was attractive mainly because of its sops. The sops will now very likely disappear. So we will have to weigh if it makes economic sense to import from Iran.”
India’s imports had declined in the month of January-June by 23% this year. Indian oil companies had stepped up purchases from other countries such as Mexico, Iraq and Venezuela. Industry watchers reveal that that most oil companies will now renew their shipments from Iran.
(Photo courtesy: www.aleqt.com/)