A day after sanctions-hit Iran reached a landmark deal with six other nations, India said it was “a positive development” that could lead to a fall in global crude prices. Any fall in global crude prices would help energy-deficit India, which imported crude oil and products worth $125 billion in FY15, meet the fiscal deficit target of 3.9% of GDP for FY16.
“With Iran coming to market, the assumption is that there will be further slide in oil prices… India will be one of the beneficiaries of sliding oil prices,” petroleum minister Dharmendra Pradhan said on Wednesday.
Pradhan also discussed implications of the Iran deal with D P Srivastava, India’s ambassador to Iran, in New Delhi on Wednesday.
On Wednesday, Brent crude was down 30 cents at $58.21 a barrel. A Reuters report quoted Goldman Sachs estimate saying Iran could supply and extra 200,000-400,000 barrels of oil per day (bpd) in 2016 on top of a release of 20-40 million barrels from floating storage, unleashing a ramp-up in supply from a nation that holds some of the world’s largest oil reserves. Iran exported almost 3 million bpd of crude at its peak, before Western sanctions saw shipments collapse to about a million bpd over the last two years.
India is the world’s fourth largest oil consumer and also the second biggest buyer of Iranian oil after China, stood with the Islamic nation while it was hot by sanctions. Though India drastically cut down its imports from Tehran, in 2014-15, India bought nearly 10-11 million tonnes of crude oil from Iran. In 2009-10, crude oil imports from Iran were to the tune of 21.20 mt, which declined to 18.50 mt in 2010-11; 18.11 mt in 2011-12 and further, to 13.14 mt in 2012-13.
When asked whether India would be willing to buy more crude from Iran now, Pradhan said, “Let’s see. It (increasing imports) depends on a lot of commercial considerations,” he said. “But one thing is sure, oil prices (in international market) will be reasonable. I believe prices will be reasonable and responsible.”