Iran's Nuclear Deal and India

When Europe was busy dealing with the crisis in Greece, the US and other five nations were busy discussing a possible nuclear deal with Iran and finally both the nations that were earlier adamant on their position agreed on a deal. Most importantly, Washington is said be very optimist about the deal. The US hardly has any interest in Iran. If Iran was eager about the deal one can easily understand the reasons but why the US does give any answer. 

Though this deal is between these countries but it will have strong impact on India. India as of now is an important trade partner of Iran even after sanctions from the US. Till now India was either paying in Indian Rupee or selling different goods and service in exchange of oil from Iran. But now India has to pay in the US dollar. This is going to increase pressure on Indian currency reserves as well as exchange rate also. Besides now Indian products will have to face fierce competition with the European nations in a few products in which Europe has competitive advantage over Indian producers. Also India's interests in oil blocks in Iran may also be impacted by the deal and ONGC and other Indian oil companies operating in Iran may have to face competition. But at the same time for India it would be easier to buy crude oil from Iran as the ferry cost would go down in coming days. 

Some people fear that prices demanded by Iran for its oil products now would be higher than the earlier prices. But I see it in different way. It would not be possible for Iran to increase prices to much as the oil production by other oil producing countries has been increased. Recently Saudi Arabia has decided to increase its oil production and refining capacity. So fear of price hike by Iran cannot be sustainable.
Although Iran's Nuclear deal is a good start for the world to move towards a peaceful and prosperous world but at the same time it is perhaps another salvo by the US against Russia that is already struggling because of lower oil prices. By the way it is good for India and obviously for Iran. This will provide cheap oil and some extra bargaining power for India against Russia at different fronts.