Oil Minister Stated That Two Indian Companies Will Buy Iranian Oil
Two Indian companies have placed orders to buy Iranian oil in November, oil minister Dharmendra Pradhan said on Monday, adding that India does not yet know if it will be granted a waiver from U.S. sanctions on Iran.
India, the world’s third-biggest oil importer, will buy 9 million barrels of Iranian oil in November, Reuters reported on Friday, citing two industry sources. India was discussing its options to buy Iranian oil with all authorities, Pradhan said. U.S. sanctions on Iranian oil purchases are due to take effect on Nov. 4.
Analysts have recently said that it is expected that the crude oil prices may increase further in the current cycle despite a recent correction. There could be the further spike in oil prices to the $120-150 level, which would ultimately contain the seeds of its own destruction by destroying demand. This would do a lot of damage in the short to medium-term according to analysts.
According to the U.S., the entire world should stop importing oil from Iran by early November. Instead, American President Donald Trump has been pressing Saudi Arabia to increase production. Iran, which accounts for about 5 percent of global oil supply, increased exports to 2.7 million barrels a day to generate as much revenue as possible before the sanctions hit.
As per reports, Saudi Arabia has increased its production to 10.5 million barrels a day, close to its highest annual average production clocked in 2016, and maintains a spare capacity of 2 million barrel a day.
However, if Saudi increases production more, then there will be the risk that it might further reduce spare capacity. This will also create the potential for even a bigger oil price spike. On the other hand, it was being reported by the chief equity strategist that there is good news for investors in emerging markets as a much higher oil price is unlikely to co-exist with a much stronger U.S. dollar.