Question

Discuss the impact of tension between us and Iran
Also list down its implications for India
Background of problem how India getting impacted
Do you think full fledged war happen give reason for yes or no .India Will it act as a mediator b/w us and iran ?
Indian rupee current impact

Answer 1

Impact of US Iran Tensions

In the months of April and May, the US took several measures with Iran as part of its "maximum pressure" campaign, including a boycott of clearance waivers to Iran's oil importers and the deployment of US military assets in the Middle East. In response to the alleged provocations, on 8 May, Iran announced its decision to partially reduce its commitments to the Joint Comprehensive Action Plan (JCPOA) and allow European states to reorganize the agreement's financial terms Set a 60-day time limit for the year, marking a highly significant development since the ratification of the nuclear deal in 2015. Tensions in the region have been heightened by Iran and its allies' alleged involvement in recent attacks against US allies against four naval vessels, including two Saudi oil tankers off the UAE coast.

Iran has so far opposed direct negotiations with the US, indicating the high level of influence exerted by radicals on the country's foreign policy. Tensions between both Iran and the US are likely to remain high, which is likely to continue its strategic posturing in the region in the short term, eventually forcing each other to the negotiating table.

The response to the above mentioned activities the impact on the global economy is that the WTO is expected that the global economic slowdown will revive after the US Iran tensions. It also states that the tensions will increase the oil prices and it destabilize the financial market.

Implication on India

India is a huge oil-dependent country and imports 84% ​​of its oil needs and roughly 60% of oil from the Middle East. As tensions have arisen in the world's largest crude oil export sector, this will have a double impact on the supply of oil to India as well as the price rise globally. While India has cut oil imports from Iran, Iraq is one of the top suppliers. Therefore, the military conflict in Iraq would cause crude oil production to be 4.6 million barrels and would have a direct impact on prices globally and also supply to the Indian market.

India’s Relation with Iran

The Foreign Minister of India recently visited Tehran in mid-December after 2 + 2 talks with the US. Following the recent increase, he also spoke to his American and Iranian counterparts, demonstrating Indian interest in de-escalation. India has not associated itself with the US or Iran. However, with its deep differences with the US economy, it has no choice but to observe US sanctions, as most countries globally do. As a result, economic relations with Iran have deteriorated, oil imports have declined to zero, and development of the Chabahar port has slowed despite US waivers, as shipping and other companies do not want to face the potential risk of US sanctions. The obstacles that India faces will continue until the US policy on Iran changes.

About Fully Fledged war and India’s mediation

I think a fully-fledged war will not take place. It is widely believed to have been responsible for last weekend's bombings in Saudi Arabia, in which drone and missile strikes hit two important Saudi oil facilities, cutting the country's oil production by 5.7 million barrels per day and 5 percent in global oil supplies Decreased. If the Trump administration decides to retaliate militarily for these attacks, the ensuing confrontation is likely to mark another US oil war in the Middle East. However, this would be a serious misconduct. In this case, it is more likely to prevent oil interests from inciting war. India will not interfere in the US Iran tensions since India have great contact with both the nations India won’t be ready to deteriorate its good relationship with the countries.

Impact on Indian Rupee

The Indian rupee (INR) depreciated by 4 per cent against the US dollar (USD), with global oil prices touching a low of 71.77 against the US dollar. In the days of American Iran tensions .. Since the death of General Soleimani, oil prices in India have already risen by four percent. This rise in crude oil will also affect India's energy supply. This will result in an increase in India's exports and a decrease in foreign exchange reserves. There is more than a certain probability that the value of the rupee will go down. And at a time where India's economy is experiencing temporary slow growth.