The US is now considering lifting sanctions on about 140 million barrels of crude oil stranded in Iran’s sea. Its main objective is to reduce rising oil prices around the world and bring stability to the energy market. US Treasury Secretary Scott Besant has indicated that Washington could use Iranian oil to keep prices under control for the next 10 to 14 days. After this news, the prices of Brent crude in the global market have fallen from $ 119 to around $ 107-111 per barrel.
What will be the impact on oil prices and the global market?
The supply of crude oil will increase once Iran’s oil is allowed to enter the market. According to the report, the 140 million barrels of oil stuck with Iran is equal to 10 to 14 days’ demand of the global market. When such a large amount of oil comes into the market, prices are likely to fall further. Although a bill has also been passed in the US Parliament to tighten the sanctions, the administration is considering releasing this oil in the market for economic stability.
Big benefits for India
Iranian oil has always been a good option for India and this relaxation can provide many benefits:
Cheap Transport: Due to the geographical proximity of India and Iran, shipping costs are very low and oil reaches quickly.
Refinery friendly: Indian refineries can process Iranian ‘light’ and ‘heavy’ grade crude without any technical changes.
Supply option: The arrival of Iranian oil will reduce India’s dependence on other countries like Russia and will give India the power to buy oil at better terms.
Safe sea route: 35-40% of India’s oil comes from the Strait of Hormuz. Due to reduction in tension, there will be less danger to Indian ships on this route.
What will be the further outcome?
Topics Possible impact Global supply 140 million barrels of new oil will come into the market Iran’s earnings Iran may get a profit of about 15 billion dollars India’s savings will get less transport expenses and better credit terms Market price Crude oil prices may fall by 10 to 15 dollars