China and India-two of the world's largest oil importers and the biggest demand growth centers globally-are close to setting up an oil buyers' club to have a say in the pricing and sourcing of crude oil amid OPEC's cuts and USA sanctions on Iran and Venezuela, Indian outlet livemint reports, citing three officials with knowledge of the talks.
The United States demanded on April 22 that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers that had allowed Iran's eight biggest customers, a lot of them in Asia, to import limited volumes. For the full month, daily production was 890,000 barrels, according to a Bloomberg survey of officials, analysts and ship-tracking data.
But Washington hopes that soaring USA oil production - now at an all-time high of more than 12 million barrels per day - will keep global markets well-supplied and hold prices down.
In 2018-19, India imported close to 10% of its domestic oil requirement from Iran.
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NDTV has learnt that Foreign Minister Sushma Swaraj discussed this issue with US Secretary of State Mike Pompeo on phone last week.
U.S. President Donald Trump's administration will on Thursday end waivers that have allowed Japan and seven other countries to import oil from Iran without facing American sanctions.
But U.S. -based critics of Trump's sanctions have said that over the long term even U.S. allies will tire of having to comply with the measures and that smuggling of the oil could eventually rise.
India's Petroleum and Natural Gas Minister Dharmendra Pradhan said last week that India will get additional supplies from other major oil-producing countries to compensate for the loss of Iranian crude. Last week, Brent hit a six-month high above $75.
"China and India should do so to grab more bargaining power to make oil prices more sustainable", Jawaharlal Nehru University Professor Srikanth Kondapalli told the Global Times in a recent interview, commenting on the benefits of an oil buyers' club.
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Zangeneh added that countries using oil as a weapon against two founding members of OPEC - Iran and Venezuela - are turning unity in the organization into division and are causing the death and collapse of OPEC.
An upward swing in fuel prices across India is likely as the nation will end its import of Iranian crude from tomorrow.
Two years ago, if you asked bulls what would happen to oil prices if OPEC reduced its production to 30.0 million barrels per day in early 2019, many would have predicted a surge above $100 per barrel.
"Amid this host of bullish catalysts is one deepening pocket of weakness―U.S. oil stocks are swelling due to an upswing in crude inventories", said Stephen Brennock, an analyst at PVM Oil Associates in London.
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After the forum, the prime minister will address a Pakistan business and investment forum on April 28. He said Pakistan also wants to sign an expanded free trade agreement with China.