Joint Comprehensive Plan of Action
Joint Comprehensive Plan of Action or JCPOA is an agreement of China, France, Germany, Russia, the UK, the US and the European Union (EU) with Iran signed in 2015.
Features of the pact:
- As per the agreement, Iran agreed to make certain changes to its nuclear programme to ensure it does not threaten the regional stability.
- In return for the UN, the EU and the US agreed for diluting their sanctions against Iran.
- Nuclear related sanctions on Iran were lifted by the US effective January 1, 2016.
US has withdrawn from the JCPOA and that US sanctions will be re-imposed on Iran. The other participating nations, France, Germany, UK, EU have expressed disappointment over the move and continue to remain a part of the JCPOA.
JCPOA and oil prices:
- Sanctions on Iran have the potential to fire up oil prices, which is already been on the boil.
- To arrest the continual decline in the prices of the crude (OPEC) decided to cut its output. The impact of the supply tightening has already shore up the oil prices.
- The prospect of renewed US sanctions on Iran, the third largest oil producer among OPEC nations, may further fuel this rise.
Impact on India
- Oil makes up an average of 25 per cent of India’s import bill and the country has increased its oil imports from Iran ever since the sanctions on Iran were removed in 2015.
- India’s imports of petroleum and its products from Iran more than doubled.
- Sanctions may necessitate India to scale down its purchases from Iran.
- The increasing crude oil prices will make import more expensive and may add to the current account deficit. [The Hindu]