As concerns over a potential conflict in the region grow, the pressing issue of what a conflict would mean for the price of international crude oil needs to be addressed urgently.
While India is likely to meet the shortfall in its crude oil imports, the Trump administration’s sanctions on Iran have the potential to either seriously damage India’s ties with Iran or hinder the strategic partnership with the United States.
With US sanctions in place on the Venezuelan oil industry, global oil prices are set to rise once again, which may have major geopolitical and geo-economic consequences.
Given that Iran accounts for around 10 per cent of India total oil imports, the immediate factor for New Delhi will be to look at various options to deal with the situation without jeopardising its energy security.
Prime Minister Narendra Modi has made a foreign policy course-correction after realising that the strategic tilt towards the United States has not only grossly upset India’s geopolitical image but also undermined national interests.
While the provisions of the Countering America’s Adversaries through Sanctions Act (CAATSA) are unlikely to be imposed on India anytime soon, it is nonetheless likely to prove a dampener on an otherwise booming defence relationship between India and the United States.
The lifting of sanctions against Iran relating to its nuclear activities marks an important turning point for Iran, the region, the United States, and the rest of the world.
US President Barak Obama recently signed a tougher sanctions law against Iran in a continuing bid to coerce Tehran into abandoning its nuclear programme. This Backgrounder discusses the reactions of the emerging powers to the new sanctions and their implications.
