Iran Boosts Trade Ties With South Asia

Iran has slowly strengthened its trade ties with South Asia since January (2016) when curbs on Tehran were lifted by the US and its Western allies. Almost all the South Asian countries, including India, Bangladesh and Sri Lanka, have started receiving huge amount of crude oil from Iran.
In October, Iran beat regional rival Saudi Arabia to become India’s top oil supplier. Speaking at a press conference in Tehran over the weekend, a senior Iranian official said that Iran, which used to be India’s second-biggest oil supplier (after Saudi Arabia), failed to increase the volume of export to India in the last couple of years mainly because of tough Western sanctions over its nuclear development programme. However, according to the official, the scenario changed in January and Iran’s oil exports to India shot up to 7,89,000 barrels per day (bpd) in October.
As per a report prepared by Thomson Reuters Oil Research and Forecasts, Saudi Arabia supplied 6,97,000 bpd of crude oil to India last month and Iraq exported 7,84,000 bpd. Commenting on the issue, a top Indian official said that although Saudi oil was more ‘refined’, Iran exported more crude oil to India mainly because of less availability of crude from Saudi Arabia. He explained that Riyadh allowed Iran to become top oil supplier to India by increasing its capacity to refine oil instead of just exporting more crude.
Ehsaan ul Haq of the UK-based consultancy firm ‘KBC Energy’, too, believes that there will be a tough competition between Saudi Arabia and Iran as far as crude export to South Asian countries is concerned. “Saudi Arabia’s refining capacity has increased over time and so it is not in a position to increase its exports further, whereas Iran is better placed to raise its output and sales to India,” he said.
Haq further said that another reason for the surge was Iran’s decision to offer price discounts, adding that the move encouraged India to purchase more crude oil from the West Asian country. India, which plans to set up its strategic petroleum reserves (SPR), imported two million barrels of crude from Iran for the SPR stocks. New Delhi may also import another four million barrels of crude oil from Tehran this month.
Iran produces around four million bpd of crude oil and exports 2.4 million bpd. Even after dropping to one million bpd during sanctions, Tehran’s exports have slowly gained momentum. Experts believe that Iran can be able to export more than 3 million bpd (the volume Iran had exported in 2011) in the coming months.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s