Oil price spike or ignore Trump: China and India's big decision

How do you solve a problem like US foreign policy? It’s a question two of the world’s largest oil consumers will have to wrestle with over the next four months -- and their answers will define the global trade in oil.

China and India, who together imported about 1.4 million barrels a day of Iranian crude over the past 3 months, will soon have to decide whether they want to snub the US government’s desire to bring Iranian oil exports to zero, or run the risk of an ever-escalating crude import bill. It’s a story that’s complicated by the emergence of the US as a major exporter of crude, in particular to China.

Down one path lie surging oil prices and less profitable refineries. Down the other, the wrath of the US government and the risk of exclusion from America’s banking system.

“The question is: to what extent India and China can pick up the slack,” said Eugene Lindell, analyst at JBC Energy GmbH. “If you’re importing 10 million barrels a day and you manage to lower the price of all your imports by a buck or two by taking Iranian crude, it makes a big difference.”