Global oil demand is rising amidst rivalries in oil producing Islamic countries.
In this scenario India has taken some smart moves to meet the energy demands.
What is the significance of Arab nations?
The Arab Gulf Monarchies such as UAE, Saudi Arabia, Kuwait, Iran, Iraq, and Yemen have major supply of oil in the globe.
The major markets for oil supplies from the Arab/Persian Gulf countries are China, India and Japan.
Iraq is India’s largest supplier of oil, overtaking Iran and even Saudi Arabia.
What are the concerns faced by these nations?
Sectarian Shia-Sunni and civilizational Arab-Persian-Israeli rivalries dominate the oil politics of this neighbourhood.
With the discovery of shale oil/gas, North America and parts of Europe are relatively immune to influence by oil producing Arab nations.
The US is expected soon to become the largest producer of oil and gas in the world.
Apart from this, Russian oil and gas contribute to meeting energy demands in Europe and across Eurasia.
OAPEC nations are preoccupied in dealing with a resurgent Iran, which is presently free from western led international sanctions.
Iran has also sought to change the balance of power in the Arab world, challenging Saudi pre-eminence.
What were the pressures of oil producing nations on India?
In 1973, Organization of Arab Petroleum Exporting Countries (OAPEC), led by Saudi Arabia, announced an oil boycott of countries like Canada, Japan, the Netherlands, the US and the UK.
OAPEC considered these nations to be pro-Israeli, and it also demanded India to close the Israeli Consulate or face an Arab oil boycott.
A cash-strapped India found itself in a desperate economic situation, as oil prices rose rapidly from $3 to $ 43 per barrel.
But India emerged relatively unscathed, due to developments like oil supplies from the Soviet Union.
Also, the discovery of “Bombay High” oil and gas assisted India’s stability.
What is India’s oil diplomacy all about?
India has wisely stayed away from any participation in this rivalry, by handling relations with the Arab Gulf States and by making use of oil rich western neighbourhood.
India’s primary interests lie in the safety and welfare of the over 7 million Indians living in Arab Gulf countries.
Due to this, India continues its emphasis on ties with Saudi Arabia, the UAE and Oman, amidst taking efforts for a sustained co-operation with Iraq (which is India’s largest oil supplier).
Indian companies have started investing significantly in exploration of shale gas in South America and in USA.
Apart from this India is also preparing to develop storage capacity of petroleum in the event of any cut off of oil supplies due to regional tensions.
