'US waiver not to have much impact on India'

With the Brent crude trading at a six-month high after the US ended sanction waiver on major importers of Iran oil, India is staring at a high oil import bill but the government on Tuesday allayed fears that the move would hit the country in any significant way.

"Government of India has put in place a robust plan to ensure that there is adequate supply of crude oil to Indian refineries from May 2019 onwards. There will be additional supplies from other major oil-producing countries from different parts of the world," Petroleum Ministry said hours after the Donald Trump administration announced the end of waiver that allowed New Delhi to buy crude from Iran on concessional terms.

The Indian refineries are fully prepared without any problem to meet the national demand for petrol, diesel and other petroleum products in the country, an official from the ministry told reporters here.

The current waiver on eight oil importing countries, including India, expires on May 2.

Though Brent crude prices touched a six-month high and almost neared $75 per barrel, the state-owned oil marketing companies kept the retail prices of petrol and diesel unchanged on Tuesday, a day when the country is in the midst of the third phase polling for the national elections.

With Iranian exports now being brought down to zero, it would mean roughly 1 million barrel per day of supply going off the market. Saudi Arabia, UAE and Russia Russia have been trying to ramp up production but how soon that could be done is still not sure.

A spike in oil prices is also expected to fan inflation in major way as India is the net importer of crude oil and imports 80% of its domestic consumption.

The Reserve Bank of India too had flagged concerns over an expected rise in oil prices in its monetary policy report earlier this month. If oil rises beyond a point and puts pressure on inflation, the RBI may not be able to give a further cut in policy interest rates going further, analysts said.