[image: India imports over 80 percent of its crude oil requirements,leaving it vulnerable to oil price surges]
NEW DELHI – The end on Thursday of US sanctions waivers for purchases ofIranian oil is likely to hit India’s economy hard, increasing fuel costsand quickening inflation, analysts say.
Last May, President Donald Trump withdrew Washington from the 2015 Irannuclear deal with world powers that had given Tehran sanctions relief inexchange for curbs on its nuclear programme.
The United States reimposed oil sanctions on Iran in November but initiallygave eight countries — including India and several other US allies –six-month reprieves.
Washington announced last week that the waivers, which have also benefitedChina and Turkey, would expire on May 2.
“US sanctions on Iran is a double whammy for India after the Venezuelansanctions,” said Vandana Hari, founder of Vanda Insights, a global energymarkets portal.
“It will have to pay more for imports and face higher foreign exchangeoutflows,” she told AFP.
India — Asia’s third-largest economy — imports over 80 percent of itscrude oil requirements, leaving it vulnerable to oil price surges.
A barrel of crude recently hit a six-month high of $75 due to America’ssanctions on Iran and Venezuela.
India buys mostly from Saudi Arabia but has a long history of purchasingIranian crude.
New Delhi announced last month that it would acquire additional suppliesfrom elsewhere but analysts say it won’t be able to fill the gap left byIran.
Read Top Stories
“No one is going to give charity to India in the oil market. Even SaudiArabia has no plans to replace Iranian crude in the global market,” MadhuNainan, editor of PetroWatch, told AFP.
Oil is paid for in dollars and soaring crude prices puts pressure onIndia’s rupee.
Higher prices also increases the cost of fuel at India’s pumps and curtailsgovernment attempts to keep inflation low.
India’s government cut fuel duties last year in an attempt to quell publicanger after protesters took to the streets against record petrol prices.
With inflation low presently, India’s central bank has cut interest ratestwice this year to help boost the economy.
Any surge in inflation sparked by the end of the sanctions waivers wouldmake it hard for the Reserve Bank of India to cut again at its next meetingin June.
India is busy with a mammoth general election and analysts say whoeverforms the next government — Narendra Modi’s Bharatiya Janata Party orRahul Gandhi’s Congress — will have to come up with a long-term solutionfor its oil needs.
“The Indian government needs to send a message to Washington that itunderstands the need for sanctions but also to press it to find aresolution to the problem,” said Hari. -APP/AFP
