India stands to gain the most from this move as US shale oil is competitively priced in comparison to crude oil from Gulf countries.
After lifting of the Iran sanction waiver on India, the US is now said to have offered oil and gas at concessional terms from its own reserves. The move is intended to help India meet its crude oil requirements.
During talks with Indian officials and Alice Wells, US Principal Deputy Assistant Secretary of State for South and Central Asia showed USA's intent in supplying higher quantities of oil and gas to India at short notice to ensure that India does not face oil shortage, as per a report in Mint.
Wells also hinted that key energy producers -- the United Arab Emirates (UAE) and Saudi Arabia -- have been asked to ensure stable oil supplies to all friendly countries and partners, the newspaper report stated.
Moneycontrol could not independently verify the report.
As per the report, US could offer trade concessions on oil exports that are on par with those offered by Iran. The latter currently offers India players -- Indian Oil Corporation, Mangalore Refinery and Petrochemicals (MRPL) and Nayara Energy (formerly Essar Oil) -- cheaper freight and a 60-day credit period.
"The offer has been indicated and this needs to be worked out in detail post May 2, when petroleum-related Iran sanctions waiver is lifted on five oil importing countries including India. Transportation cost is an issue to bring oil from the US," the newspaper report quoted a diplomatic source as saying.
India’s oil imports from the US barely accounts for about a percent. So, it is not surprising that it stands to gain the most from its decision to lift the Iran sanction waiver.
But India also stands to gain the most from this move as US shale oil is competitively priced in comparison to crude oil from Gulf countries. In fact, the price differential between Brent and Dubai crude has narrowed and despite the higher transportation charges is still attractively priced. If the US were to offer a $2-4 per barrel discount against Dubai crude, if would be enough to cover India’s freight costs.
