Big gains for Indian firms as Iran pumps more oil; crude prices may drop $4/barrel

News:

• Iran reached an agreement on its nuclear programme with six world powers led by the US, a development that could end a nearly four-decade-old standoff with the West.
• The agreement limits Iran’s nuclear capabilities for a decade and puts in place a tighter inspection regime in return for lifting financial and military sanctions.
• This would benefit the upstream players such as ONGC and Oil India, as Iran is likely to pump more crude oil into an already surplus market, pushing prices even lower.
• Iranian production is expected to increase by close to 0.5 million barrels per day in six months which will result in a crude price impact of close to $3 per barrel.
• This will lead to under recovery declining by Rs 3,600 crore and upstream company realisations will improve by Rs 1,200 crore.
• India’s oil imports from Iran declined in January-June this year by 23 per cent as companies curbed inbound shipments.

Source: ET