India could stop oil imports from Iran, courtesy US sanctions

As reported by Bloomberg, India's biggest state-run petroleum companies, Indian Oil Corporation and Bharat Petroleum have not placed any orders on Iran for crude oil imports in November.

Meanwhile, Nayara Energies said that it doesn't plan on making any oil purchases from Iran in November, and Mangalore Refinery and Petrochemicals hasn't made nominations for the month yet.

India is the second-largest buyer of Iranian oil after China, having imported an average of 577,000 barrels a day in this year - about 27% of Iran's oil exports.

Iran's third-largest customer, South Korea, has already heeded US sanctions, and Japan has also temporarily halted oil imports for Iran.

Meanwhile European nations are also cutting imports to zero.

Things aren't looking good for Iran.

That said, oil prices are set to skyrocket once sanctions come into effect in early November.

On the back of reduced exports from Iran, the Brent crude has already crossed the $80 mark.

With US sanctions set to result in a cut of up to 1.5 million crude oil barrels a day, analysts estimate prices to soar to $100 a barrel.

Given the already escalating petrol and diesel prices in India, further increases in crude oil prices could lead to public unrest.

Fuel prices are determined not just by global crude oil prices, but also by the amount of taxes imposed on them.

With the rupee weakening against the dollar, and crude oil prices set to escalate, the government might have to slash taxes.