As Iran and world powers reached a landmark nuclear agreement on Tuesday, capping more than a decade of negotiations, analysts said India stands to gain from the agreement.
The deal looks to significantly limit Tehran’s nuclear ability in return for lifting international oil and financial sanctions.
For Indian consumers, it could mean lower petrol and diesel prices in the long term as Iranian crude begins to enter the global market, which is already facing a glut, around the second half of 2016. The import price of India’s crude basket, currently at $55.62 a barrel, is expected to come down. The next retail fuel price revision is expected on Wednesday.
Immediately after the announcement of the deal, global oil prices fell. Brent crude was trading at $56.86, down 1.7%, while NYMEX crude declined 2%.
Analysts said global crude prices are likely to settle down in the $50-60 range. Earlier this month, the International
Energy Agency had reduced the demand forecast for the next year to 1.2 million barrels per day (mbd) from 1.4 mbd this year.
Oil prices have already fallen since July 2014, and reached a low of $45 a barrel before stabilising at around $60 a barrel.
India imported 10.95 million tonnes of Iranian crude last year according to government data. Out of this, Essar Oil and Mangalore Refinery and Petrochemicals imported about 5 MT each, while Indian Oil imported the rest, industry officials said. Iranian imports contributed 5.78% to India’s total oil import bill.
After the sanctions are lifted, Iran would have no incentive to sell cheaper crude to India, said Deepak Mahurkar, leader, oil and gas, PricewaterhouseCoopers India.