The Oil Price will go up in the coming days as following US sanctions, India from today has stopped importing oil from Iran even as the two biggest importer countries, China and India are trying to come together to take on US sanctions.
The US in November last year scrapped a multi-nation nuclear deal with Iran and re-imposed sanctions, which also does not grant exemptions to any oil customers of Iran.
India, however, was among the eight countries that got a waiver from the sanctions for six months, which has ended now – bang in the middle of the national election. India will now import oil from the UAE, Saudi Arabia and the US.
The centre on April 23 had said it was adequately prepared to deal with the impact of the US decision to end waivers that allowed it to buy Iranian oil without facing sanctions. Foreign Ministry spokesperson Raveesh Kumar had said the government would continue to work with partner nations, including with the US, to find all possible ways to protect India's energy and economic security interests.
But despite the reassurances, the upstream Oil Companies will start bleeding as it has to buy crude at a higher price and then refine it and then sell it in the current price level which is not economically viable.
The NDA government is unlikely to allow the price rise in the middle of an election and that it can be held up till the end of this month to avoid the national polls.
Iran is the third-largest supplier of oil to India, and importantly, it came with benefits like free shipping and rupee payments, which are unlikely to happen now with others. This could make India's oil purchases more expensive and push up domestic petrol and diesel prices.
Turkey and China, the two other large importers of Iranian oil, will not be complying with the US demand.
India used to get a tenth of its supplies from Iran at lower prices because of more comfortable credit deals and lower insurance.
Meanwhile China and India—two of the world's largest oil importers and the most significant demand growth centres globally—are close to setting up an oil buyers' club to have a say in the pricing and sourcing of crude oil amid OPEC's cuts and U.S. sanctions on Iran and Venezuela.