With the encouraging indications, both from the US
and Iran, about the revival of 2015-nuclear-agreement, the world’s second and
third consumers of the crude oil are pinning their hopes on a positive outcome
in a matter of weeks, not many months.
Both the US and Iran have shown some flexibility
recently, clearly deviating from the rigid stance they maintained, a few months
ago.
Iran has been carrying on producing oil, even when
the sanctions were in place – and President Trump was in office with the teeth-grinding
determination to foil this attempt. The Iranians must have hoped that there
would be a new administration in the White House in 2021.
Into April 2021, Iran’s hope to revive its oil
exports and ailing economy, battered by years of US-led sanctions, is more
intense than ever before; so is the determination of its regional neighbours to
cash in on the steady supply of crude, with the proximity to the source in
their favour.
There have been reports that China continued to buy
Iranian oil despite the sanctions; it will only accelerate in the event of the
sanctions against Iran being lifted, as China’s economy is growing again.
India, with its strong traditional ties with Iran, reluctantly
observed the US sanctions against Iran. Since it could compensate for the loss
in supply from Iran’s regional rival, Saudi Arabia and Iraq, it never became a
serious problem.
This year, however, the diplomatic relation between
India and the kingdom has become strained over the production cuts of crude oil
by the OPEC+ that led to a steep rise in petroleum products at the pumps in
India.
India’s repeated pleas for the reversal of
production cuts fell on deaf ears and the disagreement turned into an unpleasant
spat between the two; India even threatened to search for alternative sources
for its supply.
True to its threats, it did buy crude oil from
alternative sources: the US and Guyana came to the fore; the US even became the
second biggest exporter of crude oil to India; oil exports from Saudi Arabia,
meanwhile, fell by 34% in February.
Saudis did not take threats lightly either; they increase
the price of crude oil for Asia in April, causing significant collateral
damage.
Indian media, meanwhile, reports that Indian
refineries are preparing themselves for buying crude oil from Iran as soon as the
sanctions against Iran are lifted.
Judging by the scale of preparations, if the sanctions
are lifted, both India and China will be on unprecedented buying spree. This
dynamism will certainly change the politics in the region in a dramatic way,
perhaps, compelling Saudi Arabia to fight for its corner.
