MACRO-ECONOMICS Iran, The United States of America, Britain, France,

MACRO-ECONOMICS
INDIVIDUAL ASSIGNMENT

 

Ankur Parwal – CMM025

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In April, President Trump, refuses to certify Iran’s
compliance of terms of the Nuclear Agreement reached with Iran jointly by
Russia, EU and America during Obama Presidency. America re-imposes sanctions on
Iran. Oil prices rise to more than $ 80 a barrel.  

 

Iran nuclear
deal was a 159-page agreement with five annexes, it started in 2015. An eight
member committee was setup to supervise this includes Iran, The United States
of America, Britain, France, Germany, Russia, China and the European Union. Under the deal, Tehran would reduce the number of
centrifuges to 5,000 at the Natanz uranium plant–half of the current number.
Nationwide, the number of centrifuges would reduce from 19,000 to 6,000.
The enrichment levels would be brought down to 3.7 percent, which was much
lower than the 90 percent needed to make a bomb. The stockpile for the
low-enrichment uranium would be capped to 300 kilograms for the next 15 years,
down from the present 10,000 kilograms. This
helps in lowering the capability of Iran to make a nuclear bomb and ensuring
that nuclear power usage is for civilian use only.

 

Reimposing of sanctions would restrict
Iran’s exports of oil. Iran comes in one of the top 10 countries of oil exports
(exporting worth of $29.1 billion). Country exported about 777 million barrels
of crude oil last year, averaging 2.62 million barrels a day. 62% of shipments
were sent in Asia and 38% of exports was in Europe. Biggest importers of Iran’s
oil are China, world’s top oil buyer and energy consumer. Therefore if Iran is
restricted to export oil then a huge supply of oil will be cut out resulting in
higher demand and lesser supply. This would impact global trade as prices will
rose above 80$ per barrel from 70.15$ (present price). Countries which would be
majorly effected are India & China as they are developing. Oil is an
essential component as every process requires oil and both the countries are a
huge buyer of oil. When price will increase to 80$ per barrel then countries
will import lower than current position.

India imports 13% of Iran’s oil exports
which is about 11% of India’s oil import. Rise of price would increase
inflation rate which will slow down the market which will lead to unemployment,
fall in stock market. Whereas UAE will benefit from re-imposing of sanctions
because supply is been cut off and demand is high for oil, hence price would be
raised. Profits will increase a lot

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