Donald Trump or Iran's Cheap Oil: Dilemma Facing the Fastest Growth of Users

The US embargo on Iranian oil shipments has put Prime Minister Narendra Modi in an embarrbading situation. If he plays the game, India could find himself on the side of President Donald Trump on the trade but lose cheap supplies and valuable foreign exchange.

Iran's oil imports totaled about $ 9 billion in March and the substitution of some contracts for North American crude oil will help India reduce its trade surplus by 24.5 billions of dollars with the world's largest economy. The South Asian nation is already buying more crude in the United States, according to data from the Census Bureau and the Energy Information Administration.
While the end of the purchases in Iran will cost India savings on shipping costs and the longer period of credit offered by one of its suppliers, the trade surplus with the United States will be at the heart of Trump's trade war. with China. On the one hand, it will soften the approach on thorny issues as India has been named in the US Treasury Watch list of potential currency handlers who use exchange rates to boost the exports.

"The upcoming sanctions against Iran offer a golden opportunity to market more American oil to the Indian market," said Abhishek Kumar, senior energy badyst at Interfax Energy in London. "The escalating trade tensions between the United States and China will also favor the arrival of more American oil into the Indian market."

India is prepared for other supplies after the US decision to reimpose sanctions against the Persian Gulf State.

Trump's actions in Iran and China:

Iran: India could cut back on Iran's purchases after the US embargo Pompeo warns of Europe threatens Iranian support An Iranian official asks Trump China: the trade war weighs because China will import less soy for the first time since 2004 China's cooling economy worries global growth The trade war is jeopardizing growth "complacent" markets.

The reduction of the trade surplus could also help India to obtain a possible exemption from US tariffs on certain products, notably steel and aluminum. India, for the time being, announced retaliatory tariffs on a series of US imports, but said that the trading room was open.

Largest Volume

Gross Imports from the United States Increased 800 Percent YoY to 4.72 Million Barrels in May, the Largest Volume Since at Least 2015 which data is available. India, one of the world's largest oil consumers, could fill the surplus up to $ 4 billion through oil imports alone, government officials said. in April.

But there are limits to what India can buy in the United States at the moment. The United States currently only has an export terminal that can accommodate superstankers of 2 million barrels preferred by distant customers in Asia and expansions in other ports are not expected to be completed until 2020.

Indian Oil Corp., the largest refiner in the South Asian nation, is working on the possibilities of entering into futures for US volumes, instead of the current practice of buying in the spot market, said President Sanjiv Singh.

India could increase oil purchases in the United States, whose first shipment reached the South Asian nation in August 2017, after Washington lifted its four-decade crude oil export restrictions .

"The United States is focusing on increasing their hydrocarbon exports to India," said Kumar of Interfax. "A premium on the Brent futures price on WTI generalized in the first quarter will provide a competitive advantage to oil from the United States"