About The DealTheIran nuclear deal (Formerly known as JCPOA) – An agreement between Iran, P5+1countries (USA, China, Russia, UK plus Germany) and the European Union, in July2015.
In this deal, Iran agrees to reduce uranium enrichment activitydrastically, dispose of its enriched uranium stocks and modify a heavy waterfacility so it could not produce material suitable for a nuclear bomb. WhatIran Gets Out Of This DealPrevioussanctions imposed by the United Nations, United State and European Union in anattempt to force Iran to halt uranium enrichment crippled its economy, costingthe country more than $160bn (£110bn) in oil revenue from 2012 to 2016 alone.According to the deal, Iran stood to gain access to more than $100bn in assetsfrozen overseas, and was able to resume selling oil on international marketsand using the global financial system for trade. WhyTrump Calls it – “Worst Deal Ever””Theyare not in compliance with the agreement and they certainly are not in thespirit of the agreement in compliance,” Trump saidTheInternational Atomic Energy Agency, which is in charge of monitoring the deal,has repeatedly certified that Tehran is complying with the limits on itsnuclear program.Itseems instead that Trump’s case against the deal is more political andstrategic: His team believes that Iran is an enemy of the United States.Iranfunds Shia militias in Iraq that commit human rights abuses against the Sunniminority, helping fuel support for ISIS.
It funds and arms thePalestinian militant group Hamas. It has played a growing role in fuelling theYemeni civil war, sending arms and money to the Houthi militant group that toppledthe country’s internationally recognized government. Tehran has alsotested ballistic missiles despite UN Security Council resolutions warning itagainst doing precisely that, even though these test do not violate thenuclear deal. It is very muchpossible that President Donald Trump would not certify Iran’scompliance of terms of the Nuclear Agreement this coming month of May ’18 (120days after the last review in October). Whatwould it mean for the Global EconomyThereis only one word for it – “Oil”.
Iran has 158 bn barrels of crude oil as it hasthe fourth largest reserves worldwide. This decertification would driveaway the investors, hence a fall in oil production.Moreover,if the old sanctions are to be put up again on Iran, It would mean that Iranwould have to stop selling oil (30 -40 million barrels), which would push upthe oil prices.Also,Once the oil production starts falling, It would put an upward pressure on theGlobal Oil prices, reducing the money that would be spent on other things.Onefinal thought is that Iran trades its oil in Non-US currency, so it would be anadvantage to the US and the US world reserve currency. Impacton China and IndiaIn2008–09, Iranian oil accounted for nearly 16.5% of India’s crude oil imports.About 40% of the refined oil consumed by India is imported from Iran.
India,which is the fourth largest consumer of oil in the world, is free to importIranian oil will have to pay in Indian Rupees. Importing goods orsending shipments to Iran will again become expensive because of high shippingcharges. Putting up sanctions will only make things harder for India.Although,Iran will loose out on options like Russia and China for their infrastructuredevelopment, which will mean that India would have a better chance at uncompetitiverates.Allsaid, India will have an advantage in some sectors and will loose on others,Like Pharmaceutical and IT sector, which would be reluctant to invest there duethe risks associated with the sanctions.