Bonjour, new guests from small-town India
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
US President Donald Trump is back in the headlines, with his announcement to withdraw from the Iranian nuclear deal and re-impose sanctions on Iran that were lifted in 2015. This has jolted global markets and sent oil prices soaring to a multi-year high.
What is it?
In 2015, China, France, Germany, Russia, the UK, the US and the European Union (EU) inked the Joint Comprehensive Plan of Action or JCPOA with Iran. Under it, Iran agreed to make certain changes to its nuclear programme to ensure that it would be peaceful, in return for the UN, the EU and the US diluting their sanctions against it. Nuclear related sanctions on Iran were lifted by the US effective January 1, 2016. However, Trump criticised this deal in his election campaign and said that he would renegotiate it if he came to power. Last week, he has announced that the US will withdraw from the JCPOA and that US sanctions will be re-imposed on Iran. The other participating nations, France, Germany, UK, EU have expressed disappointment over the move and continue to remain a part of the JCPOA.
Why is it important?
Sanctions on Iran have the potential to fire up oil, which has already been on the boil in recent months. In order to arrest falling crude oil prices, the Organization of the Petroleum Exporting Countries (OPEC) decided to cut its output by 1.2 million barrels per day (bpd) starting January 2017. In November last year, the OPEC extended this cut until end-2018. Fears of tightening supply after this cutback prompted crude oil prices to breach $60 a barrel earlier this year. The prospect of renewed US sanctions on Iran, the third largest oil producer among OPEC nations, may further fuel this rise.
Iran had significantly increased its oil production ever since the sanctions on it were removed in 2015. Its production has surged 21 per cent from 3.15 million bpd in 2015 to 3.81 million bpd in 2017. It accounts for 4 per cent of global crude oil supply. Now, countries that are keen to maintain their trade relations with the US may be forced to look for alternatives to Iran, tightening global supplies.
With crude oil prices already above $70 levels, a further rise can widen India’s current account deficit, increase inflation and weaken the Rupee further.
Why should I care?
Oil makes up an average of 25 per cent of India’s import bill and the country has increased its oil imports from Iran ever since the sanctions on the country were removed in 2015. Data from the Ministry of Commerce show that India’s imports of petroleum and its products from Iran more than doubled from $4.36 billion in the calendar year 2015 to $9.41 billion in 2017, up 116 per cent. So, if India decides to scale down its purchases from Iran, it may have to look elsewhere for its supplies – probably Saudi Arabia and Iraq, the two nations that contribute most of India’s crude oil imports.
But the even greater concern is the effect this event will have on fuel imports and pricing in India. The rally in the crude oil prices over the last couple of years has already seen India’s oil import bill swell by 33 per cent in 2017 to $101.38 billion. If oil prices surge further, that can make imports more expensive and add to fuel prices at the pump.
The bottomline
If you’ve been nervously watching your fuel bill every other week, this is another reason to worry.
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Citroen’s first vehicle sports a novel design and European interiors. It is also meant to be as comfortable as ...
The pandemic is only the tip of the iceberg that the country’s cash-poor airlines — both regional and national ...
The government is yet to specify the framework of its recently announced old vehicle scrappage policy
With initial public offerings galore, we give you a cheat sheet to score some good grades
Biggest risk in selling funds in a rising scenario is exiting early and missing out on further gains
Go for a standard vector-borne diseases policy if you don’t have a regular health plan
No credit risk is an attraction, but note the nuances
With the public looking beyond mainstream media for reports from the ground, independent digital platforms are ...
While Supreme Court has cleared the way for women seeking longer tenures and senior roles in the Indian Army, ...
Mughal Gardens in the Capital open to visitors — albeit with Covid-19 protocol — for the annual Udyanotsav
Salty, buttery, cheese coated or with maple syrup and bacon — popcorn is lending its adaptable self to gourmet ...
Its name is the starting point of a brand’s journey and can make a big difference in the success sweepstakes
Sober spirits are the in thing
A peek into where ad spends went last year and where they are headed tomorrow
Can Swiggy Instamart disrupt the ecommerce groceries space, currently ruled by the Amazons and Big Baskets? ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor