As the second largest and the sixth largest world economies respectively, China and India are oil gulping countries.
Will they be able to offset any impact of the U.S. re-imposed sanctions against Iran after President Trump pulled Washington out of the Iran nuclear deal?
A Middle East Institute ( www.mei.edu) expert is looking at the possible oil gulping effects of China and India with regard to U.S. curbs on Iranian oil exports that come with re-imposition of the previous sanctions. Here is the comment by Ruba Husari, MEI Scholar as released by the Middle East Institute (http://www.mei.edu/content/flash/2018-05-14).
China, India may keep Iranian oil exports afloat
Ruba Husari, MEI Scholar
The impact of the re-imposition of sanctions on Iran’s long-term plans to boost its oil and gas output will very much depend on whether its nuclear deal partners succeed in forging an independent trajectory from the U.S.
The Trump administration gave Iranian crude oil buyers six months to cut their imports before the imposition of U.S. sanctions following Washington’s withdrawal from the JCPOA. Some buyers will do, others will resist. But the impact of the re-imposition of sanctions on Iran’s long-term plans to boost its oil and gas output will very much depend on whether its nuclear deal partners succeed in forging an independent trajectory from the U.S.
Among its Asian buyers, the primary recipients of Iranian crude, Japan and South Korea will be the first to suspend their imports, but not China or India, which import the bulk of Iran’s crude into the Asian market. European oil importers together account for less than China’s 700,000 barrels per day imports. All in all, market analysts predict that sanctions will remove less than 500,000 b/d of oil supply from the global markets by year end. That’s unlikely to cause a big spike in oil price. On one hand, Iran’s fellow OPEC producers have enough spare capacity to make up for any shortage of supply and have already pledged to do so. On the other, companies have the option of applying for waivers which the administration might feel compelled to accommodate, precisely to avoid an oil price spike.
Since the lifting of sanctions in January 2016, Iran managed to increase its oil production by about 1 million barrels per day and was counting on outside help from Big Oil, the likes of Total and Shell, to give it a much-needed lift. Now, the deals signed since the lifting of sanctions and those in the pipeline are hanging in the balance awaiting to see whether Iran’s 4+1 partners manage to safeguard any part of the deal amid rising talk of long-term European “economic sovereignty.”
Twitter: @iraqoilforum
