Report on news article Iran sanctions may force refiners to look at new crude oil sources

MMS Sem II (Div A)

Mermbers: Shweta Bais (03) Bhushan Baragade () Varun Gheewala() Akshay Jalgaonkar () Amol Kakade ()

IMPORTANT DATA FROM THE NEWS: The new financial sanctions by the Barack Obama Government are making it difficult for countries to buy Iranian crude. Iran is Indias second biggest crude oil supplier after Saudi Arabia. India imports about 4,00,000 barrels a day of crude from Iran and the monthly payout is about $ 1 billion. COUNTRY Saudi Arabia Iran Iraq Nigeria 2008 09 25.95 21.814 14.391 10.542 2009 - 10 2010 - 11 27.188 21.197 14.96 13.197 27.361 18.499 17.158 15.813

Refiners such as Mangalore Refinery and Petrochemicals Ltd (MRPL) which buy Iranian crude oil may be severely impacted. It is not compulsory for India to follow the sanctions but the problem lies in the mode of payment which is done through intermediary foreign banks such as Turkish Banks.

ANALYSIS OF THE DATA: US government suspects threats from the Nuclear weapons which Iran is developing and therefore the sanctions are the part of US efforts to reduce Irans oil revenue and force the country to abandon its suspected nuclear weapons. From the data available it is very much clear that, as Iran contributes to 12 % of the countries import needs of crude oil, therefore it is Indias second biggest crude oil supplier after Saudi Arabia. As MPRL imports 1,50,000 barrels a day of Iranian crude oil, hence it is mentioned that it may be severely affected due to these financial sanctions. India will have to look at alternatives such as Russia for routing Iranian Crude oil payment because the current routing bank would stop dealing with Iran.

WHAT RESEARCHDO WE NEED TO DO? If India has to look for options other than Iran for importing the crude oil, could it import more crude oil from Saudi Arabia or what are other options available for import. What are the opportunities available in Spot Market. We also have to do research on feasibility of Russia for routing the Iranian crude oil payment. We have to look for factors which may affect the domestic oil refineries in getting the waves from financial sanctions made by US Government. We also have to take into consideration the extent of the threat the nuclear power of Iran and we have to look for any other threats. USE OF THIS NEWS IN THE REPORT? This article can be used by Central Statistics Organization (CSO) in the Import and Export report of the Indian Government. This can be used in Report related to Macro Economics. This can also be used for the Inflation report of Indian Economy.