Iran on Tuesday reached a historic nuclear deal that is going to result in the easing of sanctions in exchange for curbs on Tehran’s nuclear abilities. Global oil prices plunged more than a dollar after the news broke.
The historic nuclear accord between Iran and the 6 main powers, that was unraveled in Vienna, helps remove a lot many restrictions on Indian foreign policy. With the P5 + 1 facilitating a greatly improved Indian role the Greater Middle East, the repercussions of the nuclear deal also present New Delhi with a number of new geopolitical changes as well as challenges.
In the past decade, the tensions and turmoil between Washington and Tehran had threatened India’s prospects for reconciliation with the global nuclear accord, and prevented it from an efficient agenda on energy security.
The US-led sanctions to disarm Iran have caused a significant decline in India’s crude oil imports from the Islamic Republic. The deal does, however, allow for slight increases in Indian imports by removing the European Union’s restrictions on insurance for Iranian shipments.
For India, there is considerable benefit to be gained by increasing oil imports from Iran. Since February 2012, Iran has accepted 45 per cent of India’s payments for oil in Indian rupees, with the remainder in hard currency. Given the high rate of inflation in India and the low value of the Indian rupee, this is significant. The deal could benefit India by allowing it to import more oil at possibly reduced rates. On the other hand, the easing of sanctions against Iran could cause Tehran to favour trade with countries willing to pay wholly in US dollars.
As Iran and America move from nuclear accommodation to political cooperation, New Delhi must acknowledge the Middle East, its power to shape the future of the world, and embark on a pragmatic and beneficial involvement with all the key players in the region, including Iran, Oman, Saudi Arabia, and Israel.