The continuing mayhem in our stock markets, mainly due to sanctions on Iran by the US, resulting in higher crude prices and weakening rupee, needs to be viewed from the prism of wider geo-political implications. That this mayhem does not mirror the strong fundamentals of Indian economy at present is beyond doubt.
That higher crude prices driven by OPEC is not in the interest of even the US, is reflected by the following tweet from President Trump in April this year:
"Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!”
While abrogating the nuclear deal with Iran, as negotiated by his predecessor, President Trump made it clear that he was open to another such deal with Iran which according to him was just and fair.
Now, an opportunity for India in this crisis. We should:
a) Form a grouping of major oil importing countries as a counter to OPEC. The key objective of this grouping should include - setting an upper band of crude oil for OPEC, actively supporting each other to reduce dependence on oil imports from OPEC, and aggressively working on increasing the usage of alternative fuels and and associated technologies, besides assisting each other in oil exploration projects. Such a grouping is likely to have its impact on OPEC, by reducing their scope of maneuverability in raising oil prices. If nothing else, it is at least likely to bring differences of opinion in OPEC which is not a monolithic entity, and
b) Having good relations with both US and Iran, we should work aggressively on back channel diplomacy with both, to arrive at a win-win nuclear deal, which will assuage the concerns of Trump administration on the deal entered by Obama administration. Yes, this may mean tweaking some clauses of that agreement over which Trump administration has concerns. This would necessitate some quid-pro-quo by the US as well, but that would be in the its interests as well, if unlimited transfer of incomes from major oil importing countries including the US, to OPEC via reduced oil production and high oil prices has to be kept under check.
