Possible Iran-sanctions relief to weigh on crude oil prices
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Recent months have seen easing in diplomatic tensions between Iran and Western nations
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Reports have emerged that Iran might win (limited) sanctions relief, contingent upon diplomatic progress
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Possible sanctions relief would enable Iran to revive its oil exports, thereby likely to weigh on global crude oil prices
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Markets now look forward to the third round of Iran-West talks in Geneva, which begins today
Effect of possible sanctions-relief on India: Positive for Rupee
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A decline in crude oil prices would aid the Rupee
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A potential revival in India's oil imports from Iran could lead to reduction in Dollar payments to the tune of ~USD 2 bn per quarter (or ~USD 8 bn in a year), given the existing arrangement of partial payment in Rupees for Iranian oil
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However, the partial Rupee-payment arrangement is unlikely to be sustained beyond a quarter or two as sanctions-relief would enhance Iran's bargaining position and the country might be averse to accepting Rupees
Would India be able to expand oil imports from Iran, given existing EU sanctions?
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Prevailing sanctions by EU have hampered insurance cover for ships and refineries that deal in crude oil of Iranian origin. However, recent efforts by both the Indian and the Iranian Governments to resolve insurance-related issues are likely to help sustain (or even possibly expand) India's oil imports from Iran
Please refer to the attached document for the detailed report
Regards,
ICICI Bank : Treasury Research Contact:
Tadit Kundu:
(+91-22) 2653-1414 (2087)
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