US President Donald Trump is attempting the diplomatic equivalent of having his cake and eating it too when it comes to Iran and Venezuela. On one hand, he wants to exert maximum pressure and topple both governments so he’s ending waivers that allowed allies like India, Japan, South Korea and Turkey and also adversaries like China to buy Iranian oil — threatening sanctions if they don’t comply. This creates huge problems for this country and others affected by Trump’s decision. Simultaneously, Trump needs to ensure oil prices don’t soar and cross a pain threshold that would endanger his presidency. Trump’s betting his buddies, the Saudis and the OPEC, can hike production and keep oil prices on an even keel in the coming months. But there are already signs this conjuring act may be too tricky to succeed. Prices are being pushed upwards by Trump’s moves. And even if Saudi Arabia ramps up production, less will be in reserve, pressuring prices. Some analysts forecast prices will hit $80 in the summer months while others are eyeing $100 in the not-too-distant future.
The fact that India is caught in the crossfire of Trump’s actions means New Delhi’s having to scramble. India is currently Iran’s third-largest oil customer and also has strong Iranian geo-strategic links. In recent months, India has increased Venezuelan oil purchases, too. India has indicated it’s been making contingency plans and will be looking at buying more oil, primarily from the Saudis. It may also look to Mexico and the US. In addition, there’s talk India might try to use the rupee-payment system to continue Iranian oil imports. More crucially, India is waiting for a signal on whether it can continue building and operating the strategically important Chabahar Port in Iran. Egged on by Saudi Arabia, Israel and hawkish advisors like John Bolton, Trump’s decided toppling Iran’s government is a crucial goal even if it infuriates allies and endangers US-China trade talks. Still, while it will cause hardship in Iran, nobody’s expecting public unrest to unseat the government. That means Trump’s moves will cause pain all around, and yet could prove to be pointless.