Forex trading foreign exchange market crude oil wti chart 14

Why did India backstab Iran and obey the USA oil sanctions?
 As India has decided to halt all Iranian oil imports under the US pressure, a shocked Tehran urgently dispatched Foreign Minister Javed Zarif to hold talks with India. The message, reportedly, was clear from Iran, that Tehran Government was shocked by the Indian decision that it had finally given in to the US pressure and undermined the historical ties.

The unexpected betrayal by a traditional ally – India has shocked Tehran. According to reports, Indian Minister offered her best explanation and even holding out a non-committal assurance that New Delhi will reconsider its position after a new government is formed “keeping in mind our commercial considerations, energy security and economic interests.”
Now, this is a big shift from the Indian stance that it will only abide by UN sanctions. But then, it is not within Swaraj’s competence to commit anything. The Boss has to decide, and he’s busy campaigning. In the final analysis, if PM Modi keeps his job, it will be a tricky decision. For, Modi enjoys wonderful friendship with three players of the infamous “B Team” — Benjamin Netanyahu, bin Salman (Saudi Crown Prince),  bin Zayed (UAE Crown Prince) — and is wary of the fourth player, Bolton (Trump’s national security advisor). And the B team sponsors the Iran project, which is about ‘regime change’ in Tehran.

The most galling thing about the Indian betrayal is that amongst the three top importers of Iranian oil — China, India and Turkey — it’s only India that summarily packed up under American pressure. For the Modi government which claims to be ‘muscular’, such cowardly behaviour is a matter of shame. Simply put, the strategic understanding forged during the historic meeting between Modi and Iranian President Hassan Rouhani in Ufa, Russia, on the sidelines of the SCO summit in May 2019 turns out to be a damp squib. Tehran is bound to reflect over the quality of the hand of friendship that Modi extended. 

To jog the memory, India is a party to a trilateral MOU with Iran and Afghanistan with plans to commit at least $21billion to developing the Chabahar–Hajigak corridor, including $85 million for Chabahar port development by India. This includes  $150 million line of credit by India to Iran, $8 billion India-Iran MoU for Indian industrial investment in Chabahar Special Economic Zone, $11-billion for the Hajigak iron and steel mining project awarded to seven Indian companies in central Afghanistan, and $2 billion commitment to Afghanistan for developing supporting infrastructure including the construction of the Chabahar-Hajigaj railway line.

The Chabahar-Hajigaj railway line holds the potential to expand trade manifold via connectivity to the 7,200-km-long multi-mode North-South Transport Corridor India is working on to connect to Europe and Turkey — and all across Russia by linking with the R297 Amur highway and the Trans-Siberian Highway. Over and above, a planned Herat to Mazar-i-Sharif railway will provide access for the Central Asia states via Chabahar Port to link with the Indian market. The Chabahar Port also provides the only means of India developing direct access to its erstwhile air base in Farkhor in Tajikistan. Expert opinion is that Chabahar route will result in 60% reduction in shipment costs and 50% reduction in shipment time from India to Central Asia. 

The Indian media quoted government sources to the effect that the compliance with the US sanctions against Iran is the price that Washington demanded from India as quid pro quo for its support in the UN Security Council on the designation of Masood Azhar as a global terrorist. The veracity of this interpretation can never be established because the Americans will never claim ownership of any derailment of the India-Iran relationship.

Yet, it is an unfair linkage since Azhar designation has been far from a solo US enterprise. It was a collective effort where Britain and China probably played key roles alongside some very effective behind-the-scene bilateral negotiations between Delhi and Beijing aimed at carrying Pakistan along. The Americans are always quick to claim credit when something good happens — and there is always the Indian chorus that is only too keen to echo such tall claims.

Indeed, the “big picture” is not at all reassuring. For, Washington has now added two further templates to its “linkage diplomacy” vis-a-vis India. First, Washington has ratcheted up the pressure on India to remove “overly restrictive market access barriers” against American products — to quote from a speech in Delhi by visiting US Commerce Secretary Wilbur Ross in New Delhi last week. Ross repeated President Donald Trump’s accusation that India is a “tariff king”, and threatened India with “consequences” if it responded to U.S. tariffs with counter-tariffs. Ross audaciously proposed that India could balance the trade figures by buying more American weaponry.
So, what do we have here? Delhi falls in line with the US diktat on Iran sanctions, which of course will hit the Indian economy very badly, while the US is also at the same time aggressively demanding that India should open up its market for American exports. Why can’t the Modi government prioritise India’s economic concerns?
Second, the Trump administration cracking the whip on India to give up the S-400 missile defence system and conform to the US sanctions against Russia’s arms industry. A report in Hindustan Times says that the US would expect India to instead buy from it the Terminal High Altitude Area Defense (THAAD) and Patriot Advance Capability (PAC-3) missile defence systems as an alternative to S-400s. But these American systems are far more expensive and may still not be on par with the advanced S-400 system in capability.

Evidently, like in the case with Iran, the US attempt is to complicate India-Russia relations by forcing Modi to resile from a commitment he gave to President Vladimir Putin on the S-400 deal.
Meanwhile, another report has appeared that under American pressure, India joined a US-led naval exercise in the South China Sea with America’s Asian allies Japan and the Philippines. Whereas the US, Japan and the Philippines are longstanding allies bound together under military pacts, India is not part of any alliance system. Yet, India took part in the exercise in the disputed South China Sea within a ‘Quad Lite’ format. The US secretary of state Mike Pompeo has a cute expression for it — “banding together”.

The running theme in all this is that India’s strategic ties with Iran, Russia and China are coming under challenge from Washington. But the big question is how come Washington regards the “muscular” Modi government with a 56″ chest to be made of such cowardly stuff? Are the ruling elites so thoroughly compromised with the Americans? There are no easy answers.

How long shall the petroleum last?

According to BP, drivers whose vehicles rely on burning oil have a little more than a half-century to find alternate sources of energy. Or walk.
BP’s annual report on proved global oil reserves says that as of the end of 2013, Earth has nearly 1.688 trillion barrels of crude, which will last 53.3 years at current rates of extraction. This figure is 1.1 percent higher than that of the previous year. In fact, during the past 10 years proven reserves have risen by 27 percent, or more than 350 billion barrels.
The increased amount of oil in the report include 900 million barrels detected in Russia and 800 million barrels in Venezuela. OPEC nations continue to lead the world by having a large majority of the planet’s reserves, or 71.9 percent. 

As for the United States, which lately has been ramping up oil extraction through horizontal drilling and hydraulic fracturing, or fracking, BP says its proven oil reserves are 44.2 billion barrels, 26 percent higher than in BP’s previous report. This is more than reported most recently by the US Energy Information Administration, which had raised its own estimate by 15 percent to 33.4 billion barrels. (Related Article: Oil Production Numbers Keep Going Down)
That means shale-oil extraction enterprises in the United States have more to offer than many first believed. The sources include the Bakken formation spanning Canadian and US territory in the West, the Eagle Ford formation in East Texas and the super-rich Permian Basin in West Texas, which alone holds 75 billion barrels of recoverable fossil fuels.
And though Eagle Ford and Bakken seem to hold far less oil, EOG Resources, which has been working Eagle Ford, has increased its estimates of the site’s reserves. The Motley Fool reports that its latest estimate of recoverable fuel is 3.2 billion barrels, more than the nearly 1 billion barrels expected in 2010.
Nevertheless, BP is cautious in defining oil reserves. At the top of an introductory web page on the subject, the company states baldly: “Nobody knows or can know how much oil exists under the earth's surface or how much it will be possible to produce in the future.”
And while the amount of proven oil reserves, and their extraction, are rising each year, so is concern about how their recovery. Not only do new extraction methods use huge amounts of energy to get even more energy, particularly from shale, they also use chemicals and metals that many fear poison nearby soil and groundwater, and generate huge amounts of toxic wastewater.

Such methods are helping the United States, for example, to achieve energy independence. But that won’t apply to China, a huge customer for fossil fuels. BP says Asia-Pacific oil reserves will last only 14 years at current rates. That means China will have to keep importing oil, putting further strain on global reserves.

The Indian government these days is paying lot of attention to the conservation of petroleum products in view of the need to reduce ever increasing gap between demand for and indigenous supply of crude oil and petroleum products.

In the mechanised and the fast-moving world of today, the consumption of petroleum products has become an important yardstick of a country's prosperity.
Despite the discovery of new sources of unconventional energy, petroleum remains the primary energy source in India, and even more so, all over the world. The consumption of petroleum in the world, which started as a few tonnes a year around 140 years ago, has reached over 3000 million metric tonnes (MMT) per year! 

Even in India, it is increasing at a very steep rate from 3.5 MMT in 1950-51 to 74.7 MMT in 1995-96. This is expected to reach 130 MMT in 2001-2002 and 175 MMT in 2006-2007.
Out of the known reserves, only a part may be technically and economically feasible to explore. This fact, coupled with the present and expected consumption rates, implies that these reserves may not last beyond the next 30 years. 

For India, the situation could be even more difficult. Given our limited reserves, our present known stocks may not last even 10 years at the current consumption rate. Our present indigenous production is only 30.86 MMT and is less than 50 percent of our annual requirement.
Therefore, the need of the hour is to conserve petroleum by its judicious use, substituting it by other resources wherever feasible and restricting its use only to the essential needs.
Petroleum conservation becomes our joint responsibility -- be it the industries, individual citizens, organisations, oil companies or the government. Each one of us has specific and significant role to play.

How can I start a crude oil refinery in India?

All over the world, oil business is such that is taken really seriously. This is because of the huge profit that this natural resources rakes into the economies of the world. That is why even the world power countries like the united states of America would do all it takes to be in control of the world’s oil wealth.
Countries like the united Arabs emirates, as well as other countries are neck deep in the production and distribution of oil. However, that is not to say that oil business is strictly for nations, and big conglomerates. Truth is that you as an individual can also start your own oil refinery.

A Mini-refinery has to do with automated, skid-mounted oil distillation units for processing about 6,000 barrels/day or more of crude petroleum. This trade is really gaining acceptance because they are cheaper and easier to mount and do not need the number of years required to build and install a conventional (large scale) refinery.If you think this line of business might be something you would want to dabble into, or if you have always had a penchant for oil business, then you may also want to take seriously the tips to be reeled out in this article. Do note that starting this type of business does need huge funding. Here goes all the tips that can help you realize your dream of starting a mini crude oil refinery.

Starting a Mini Private Oil Refinery – Sample Business Plan Template

1. Research Is Needful

Even if you do not want to take seriously the need to undertake some research every now and then, but it is very important that you take seriously the quest to do some research as it regards starting a mini refinery.This is because you stand to gain a whole lot when you start with reading up a lot. More so, you would be able to learn a great deal when you read about the experiences of other entrepreneurs who may have gone before you. Also you need to be conversant with some technicalities in the industry.

2. Have an Educational Background

This is very important in this field of trade, as you have to come to terms with some foundational truths. This is why it may be needful that you have a sound educational back ground in some science related courses that can help aid you in oil refineries. The following courses would do; they include geology and mining, petroleum engineering, petro-chemical engineering, and a host of other courses.
However, you must note that this doesn’t mean that you couldn’t possibly start a mini oil refinery without this. This only means that you may consider having someone who has a background in one of these areas instead to be on your team.

3. Write a Business Plan

Writing a business plan is very vital. This is because to a large extent, it would help you to know how to run your business now and for future purpose. Therefore, you may want to consider allowing an expert help you with this area.
This is because there may be some financial projections that you would need to deal with on a professional level. Be sure that there are short terms and long term goals in your plan too. You can consider getting a template of how a crude oil refinery business plan looks like from the internet.

4. Get Trained

It isn’t enough that you just have background knowledge in oil refinery; it is very needful that you also get some hands- on trainings. This might not come easy as it may entail that you work in an oil refinery station. The question therefore is, what happens when you aren’t able to secure a job at an oil refinery station?
Then you want to try out another option; which is to volunteer to be a worker for no fee. If that doesn’t work out fine, then you can think of bringing in an expert to help you set things up. This might cost a lot, but you can be sure to get the best.

5. Get a Space

Starting a mini oil refinery necessitates the use of a limited   land space than what the regular large scale refineries require. You can look to locating your mini refinery in the suburb of town.
You should also look out for the refinery to be mounted close to the crude supply source. Ideally experts advice that one unit of it may not entail more than 4 plots of land. Good news is also that they can be mounted in just a few days, since they come in prefabricated modules.
Furthermore they can as well be dismounted when there is a need for relocation. If you want something a bit bigger than four plots of land, then you can consider mounting several refining units within the same premises to meet diverse dispensation needs.

6. Get Experts to Do All the Equipping

You would need some very deep experts to help in the equipping of your mini refinery. Do note that this could cost quite a lot, but you can rest assured that it wouldn’t cost as much as what you may need to start the regular large refineries. You may decide to use a different expert, or use the same person whom you trained with to pull things off, since you may not be too versed in this regard.

7. Advertise Your Business

You may begin to let words out to oil marketers, as well as owners of filling stations about your mini oil refinery. This is so important since your ability to make profit would be hinged on the amount of clients you are able to get.
Would these tips really help you in starting your mini oil refinery? Indeed the answer would be a resounding yes, as these are tips that have been used by experts who are enjoy the dividends of owning a mini oil refinery.

How much refined product is extracted from a single barrel of crude oil?
What is crude oil and what are petroleum products?

Crude oil is a mixture of hydrocarbons that formed from plants and animals that lived millions of years ago. Crude oil is a fossil fuel, and it exists in liquid form in underground pools or reservoirs, in tiny spaces within sedimentary rocks, and near the surface in tar (or oil) sands. Petroleum products are fuels made from crude oil and other hydrocarbons contained in natural gas. Petroleum products can also be made from coal, natural gas, and biomass.

Products made from crude oil

After crude oil is removed from the ground, it is sent to a refinery where different parts of the crude oil are separated into useable petroleum products. These petroleum products include gasoline, distillates such as diesel fuel and heating oil, jet fuel, petrochemical feedstocks, waxes, lubricating oils, and asphalt.
A U.S. 42-gallon barrel of crude oil yields about 45 gallons of petroleum products in U.S. refineries because of refinery processing gain. This increase in volume is similar to what happens to popcorn when it is popped.

Petroleum refineries convert crude oil and other liquids into many petroleum products that people use every day. Most refineries focus on producing transportation fuels. On average, U.S. refineries produce, from a 42-gallon barrel of crude oil, about 19 to 20 gallons of motor gasoline, 11 to 12 gallons of distillate fuel, most of which is sold as diesel fuel, and 4 gallons of jet fuel. More than a dozen other petroleum products are also produced in refineries. Petroleum refineries produce liquids the petrochemical industry uses to make a variety of chemicals and plastics.

How does the barrel price of crude oil affect the economy of the country?

6 effects of rising crude oil prices on the Indian economy

Why is everyone so concerned about crude oil prices all of a sudden? That’s because the global crude oil prices have been steadily rising over the past few months. For the first time since 2014, the international benchmark for global oil prices crossed the $80/barrel mark in May 2018 . Compare this to the $29/barrel price during early 2016! This sudden surge in prices has a great impact on various segments of the Indian economy. Let’s have a look:
  • Higher prices: adverse impact on fiscal deficit:

    India imports 1.5 billion barrels of crude oil each year . This comes up to around 86% of its annual crude oil requirement. So, the surge in crude oil prices could increase India’s expenditure, thus adversely affecting India’s fiscal deficit - the difference between the government’s total revenue and total expenditure. Fiscal deficit indicates the amount of money the government has to borrow to meet its expenses. A rise in fiscal deficit could negatively affect the economy as well as markets. The fall in crude oil prices was a major contributing factor in the reduction of India’s fiscal deficit between 2014 and 2016, according to a report by Livemint . A few years back, we explained the impact of a falling crude oil price on fiscal deficit.

  • Impact on the rupee:

    The rise in crude oil prices has a clear impact on the Indian rupee. On 24 May 2018, the rupee closed at 68.34 against the US dollar. This is a near 18-month low for the rupee, and only 0.6% away from its all-time low of 68.825, according to a Livemint report . In addition, if crude oil prices remain at these high levels, the rupee is further expected to depreciate by the year end. Rupee depreciation has a reverberating effect on the Indian economy and even the stock market. To arrest the rupee’s fall, the RBI often takes a few steps.Here’s a look at how the RBI defends the falling rupee.

  • Impact on Current Account Deficit (CAD):

    India’s dependency on crude oil imports has only been increasing over the past few years. The dependency rose from 77.3% in FY2014 to 83.7% in FY2018. The rise in crude oil price has a big impact on the Indian Current Account Deficit (CAD). CAD is a measure of India’s trade where the value of goods and services imported exceeds the value of goods and services exported. CAD essentially indicates how much India owes the world in foreign currency. An SBI report suggests that Indian’s CAD could cross 2.5% of GDP for FY2019 (providing oil price continues at $80 per barrel). Currently CAD is estimated at 1.9% for 2017-18.Widening CAD further puts pressure on the rupee’s value as well as the rest of the economy.

  • Impact on Sensex, midcaps:

    The Indian stock markets have faced a lot of pressure due to the rise in crude oil prices. Between 1 and 24 May, 2018 alone, the Sensex fell by 2.3%.In comparison, the BSE small cap and mid cap indices have had it worse with a drop of nearly 8%. With crude oil prices touching $80 per barrel, there has been a sell-off in small cap and mid cap stocks. Analysts warn that this could continue if the crude oil price continues to rise.Here’s what you can do.

  • Impact on stocks:

    A lot of Indian companies depend on healthy crude oil prices. This includes tyre, lubricants, footwear, refining and airline companies. The profitability of these companies is adversely affected due to higher input costs. This could negatively impact stock prices in the near term. On the other hand, oil exploration companies in the country could benefit from a rise in oil prices.

  • Impact on inflation:

    Oil is a very important commodity and it is required to meet domestic fuel needs. And in addition to that, it is a necessary raw material used in a number of industries. An increase in the price of crude oil means that would increase the cost of producing goods. This price rise would finally be passed on to consumers resulting in inflation. Experts believe that an increase of $10/barrel in crude oil prices could raise inflation by 10 basis points (0.1%).

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