Iran’s nuclear deal can benefit India

Vienna/New Delhi: Iran and six world powers sealed a historic accord to curb the Islamic Republic’s nuclear programme in return for ending sanctions, capping two years of tough diplomacy with the biggest breakthrough in decades.

Diplomats reached the deal in Vienna on Tuesday, their 18th day of talks. US President Barack Obama said it blocks “every path to a nuclear weapon” for Iran, while Iranian foreign minister Mohammad Javad Zarif called it a “win-win”.

Banks including Goldman Sachs Group Inc. and Barclays Plc say it would take 6-12 months for the holder of the world’s fourth largest crude reserves to revive production by about 500,000 barrels a day. Sanctions cut the country’s crude exports by more than half from a peak of more than six million barrels a day in the 1970s.

With new oil flows expected to hit an oversupplied market, Brent, the global benchmark, fell as much as 2.1% to $56.63 a barrel in London and was trading $57.87 at 9.02pm India time. Iran’s benchmark TEDPIX Index, led by oil and gas companies, advanced 0.3% at the close, the highest since April.

In China, Europe and Russia, the agreement will be welcomed by companies eager to access an untapped market of 77 million people. With an economy bigger than Thailand’s and oil reserves rivalling Canada’s, Iran is the most important market still closed to major equity investors, according to investment bank Renaissance Capital.

Ending economic penalties could open Iran’s stock market to investors in early 2016, Renaissance’s Charles Robertson and Daniel Salter wrote in a report on Monday. Inflows could total $1 billion in the first year, they said.

Oil-importing countries such as India should use the period of subdued oil prices to strengthen their monetary policy framework along with fuel pricing and taxation reforms, the International Monetary Fund (IMF) recommended in a report released, coincidentally, on Tuesday.

Low oil prices could boost India’s gross domestic product (GDP) by 0.4-0.6 percentage point over this year and next.