Asian economies are facing higher inflationary pressure as their crude oil import bill expands in line with benchmark prices. Although some analysts have argued that even oil at $100 a barrel won’t affect global demand in any negative way, a tab of $1 trillion for total Asian crude imports with Brent at $80 might do just that.
Soaring demand in China and India will be responsible for the higher expenses but both countries are likely to double down on their efforts to cut their dependence on imports, or at least imports priced in dollars as a stronger greenback is adding to their oil bill.
Imports from Iran, to be paid for in other currencies, could be a way out of the trap. Indeed, some analysts believe that the return of U.S. sanctions against Tehran will actually be a boon for China as it seeks to expand the international clout of its currency, as Iran seeks to reduce already low reliance on the global oil currency.
India has not yet made public any plans to change the terms of its import deals with Iran but it did report record-high Iranian crude imports for April, at 640,000 barrels daily. Besides, India already pays for Iranian crude in euro and unless European countries decide to comply with the sanctions, its imports from Iran will not be affected.
Deals, Mergers & Acquisitions
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