How will USA sanctions on crude oil from Iran affect India?

Ann Santiago
Мая 10, 2019

West Texas Intermediate crude for June delivery slid 42 cents to settle at $61.70 a barrel on the New York Mercantile Exchange.

The government provided eight oil sanctions waivers when it re-imposed sanctions on Iran later Trump pulled the US out of this landmark 2015 nuclear thing.

India will be hit by the Trump administration's decision to end waivers that allowed the import of crude oil from Iran without facing us sanctions.

Oil prices have had some support from signs of tighter global supply on the back of production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russian Federation.

Brent crude oil futures were at $71.28 per barrel at 0443 GMT, 4 cents above their last close, Reuters said.

The oil bulls manage to find some support from the ongoing rift between the USA and Iran, with the United States having imposed fresh sanctions on the Iranian metal industry a day before.

Indians are expected to buy at least 10 percent more gold during the annual Hindu and Jain holy festival of Akshaya Tritiya than a year ago, supporting physical demand in Asia.

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Most analysts expect Iran's crude exports to fall to little more than 500,000 bpd, down from around one million bpd in April, as governments largely bow to USA pressure.

In distillate fuel, the EIA estimated an inventory draw of 200,000 barrels, which compared with a decline of 1.3 million barrels a week earlier. United States and Chinese negotiators are meeting tomorrow with the hope to avoid such an escalation of the trade war, and thus we are expecting to see further volatility to come tomorrow when the outcome of those talks emerge.

If the trade talks fail, investors fear that it could pave the way for a global economic slowdown, lowering oil demand around the world, while putting a downward pressure on oil prices.

Global gold reserves rose 145.5 tons in the first quarter, a 68 percent increase from a year earlier, due to strong demand from central banks, according to a new report by the World Gold Council.

"The crude imports exceeded our expectations as both domestic refinery production and margins do not appear to support such high volumes of purchases", said Wang Zhao, head of crude oil research at Sublime China Information Co.

Looking ahead, all eyes remain on the US-China trade developments, with the US tariff hike looming this Friday, which may influence the risk trend and eventually impact the risk asset, oil.

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