In the wake of the new sanctions on Iran’s oil industry, imposed by the US post its withdrawal from the Iran-US nuclear deal, India is under pressure to stop importing oil from Iran by November 4, 2018. India has since curbed its oil imports from Iran and is looking to Saudi Arabia for an additional 4 million barrels of crude oil imports next month.
This new development with regards to the US sanction has left many Indian refineries with concerns given the country’s substantial dependence on Iran’s oil supplies. India is only the second biggest importer of oil from Iran after China. Many of the Indian refineries are seeking exemptions from the Government following the US sanction. The biggest exporter of oil, Saudi Arabia is expected to supply 1 million barrels each to four Indian importers by increasing its crude supply to India to make up the deficit. Hindustan Petroleum Corp, Reliance Industries Ltd, Mangalore Refinery Petrochemicals and Bharat Petroleum Corp are reported to import 4 million barrels of oil collectively in November from Saudi Arabia. India is currently the world’s top importer of oil; its monthly imports from Saudi Arabia alone average about 25 million barrels of oil.
India at present is in a particularly delicate position as it is already in the grip of falling local currency. The further rise in oil prices is an added blow to the economy making the dollar-denominated imports far more expensive. Indian buyers have been forced to turn to the Middle East for oil imports as the US has shut its crude arbitrage. The retail prices of diesel fuel and gasoline are at a record high in the country with the government cutting down its excise tax on fuel to ease the burden of the consumers.
It was reported that two of the biggest producers of oil, Russia and Saudi Arabia have joined hands to up the production output to curb the rising prices. It will have to be seen how the Government intends to check the petrol and diesel prices in India prior to the impending elections in 2019.