India will gain from Iranian oil

We need to pursue the long-term goal of self-sufficiency in energy

US President Donald Trump’s decision to renege on the US-Iran deal had created considerable disquiet in India, given its implications on our energy security. US imports months. wants from This Iran India Iran newspaper is to a within major cut back less exporter had than and taken four of eventually petroleum a eliminate to India, and its the oil position into these Recent cutting worries. that data back the In from US its response cannot the oil imports petroleum to push a Lok from India ministry Sabha Iran. question, is bound the to worsen petroleum from imports ministry Iran from accounted the has West given Asian for statistics almost countries which one-fourth in the show first of that quarter our oil total imports of this oil fiscal has jumped year. The by almost share of ten Iran percentage in total oil points imports in this from period the region compared extremely to the crucial fiscal for years Iran’s 2016-17 economy, and 2017-18. India also While stands oil trade to gain is from a double it. If whammy: India were lose to stop a supplier its oil trade of cheap with Iran, oil and it would face even face greater the global price oil because markets of will the create. supply To shock, be sure, which it is Iran’s still exit not clear from whether India will cease its oil imports with Iran. The government’s reply in the Lok Sabha has steered clear of answering the question whether refiners have been asked to prepare for such eventualities. An oil shock will hurt even more at a time when a global trade war seems likely, inflation is worsening, and a depreciating rupee is threatening to jeopardise macroeconomic stability.

Having said all this, we also need to understand that India’s high import-dependence on its energy needs mean that it is always vulnerable to sudden shocks — geopolitical or otherwise — in the global petroleum markets. Our import dependence in oil is a big reason why India cannot exploit policies such as currency devaluation to make its export competitive. While diplomatic efforts must be made to find an interim solution to the crisis, we really need to pursue the long-term goal of self-sufficiency in energy.