Sri Lanka is hoping to restore its crude oil purchasing links with Iran, banking on the success of the nuclear accord currently being negotiated between the US and the Middle Eastern nation.
“We’re hopeful that the US-Iran talks will let us bring Iranian crude to reduce our energy bill,” Power and Energy Minister Champika Ranawaka said. The West, influenced by Israeli lobbying, had intensified its decades-old sanctions to target Iran’s key economic driver--crude exports, in 2012, as it had continuously failed to meet the nuclear disarmament targets set by the US.
The sanctions had severely affected the Sri Lankan economy, as the country’s sole refinery at Sapugaskanda was optimized to process Iranian crude.
The refinery had closed down for months, as the government scrambled to purchase crude from Oman, Saudi Arabia and Abu Dhabi.
Ceylon Petroleum Corporation had stated that the processing of non-Iranian crude was reducing the efficiency of the process by up to 20 percent.
Meanwhile, despite the sanctions, China had continued to purchase crude from Iran. However, Iran’s oil revenue, which had accounted for 40 percent of government revenue, fell by over 50 percent with the ban.
Further, the global oil glut created by the US shale-oil boom caused the Middle Eastern producers to reduce their prices to stay competitive. However, Saudi Arabia, the largest producer in the region, is showing intentions of increasing prices, having already increased the price of a barrel marginally last week, while experts are still confused over the long-term outlook.
Iran does not appear to be following suit and reports say that it will maintain its prices until the sanctions are lifted. (CW)