New Delhi, Jan 18 (IANS): With the lifting of nuclear sanctions on Iran, the prospects for India as a consumer of oil, prices of which are in free fall towards levels of less than $20 a barrel, look rosy in the near term, says an expert.

"From a supply point of view, cheaper oil is good for emerging markets like India and such low prices might sustain for a longer period. It makes for lower trade deficits, helps lower fiscal deficit," Anand James, commodities expert with Geojit BNP Paribas Financial Services, told IANS.

"However, from the price point of view, low prices discourage investment in oil exploration and capital expenditure in the sector and in spin-offs, which has a depressive effect and the slowdown thereby gets exaggerated, as seen in case of investments in US oil," he added.

The Indian basket of crude oils closed trade on the last trading day on Friday at a 11-year low of $26.40 a barrel, according to official data. The oil marketer cut the price of petrol and diesel by under a rupee each on the same day.

The Indian basket, comprising 73 percent sour-grade Dubai and Oman crudes and balance in sweet-grade Brent, had touched a previous monthly low of $26.27 in September 2004.

India can resume its unrestricted import of oil from Iran, which is expected to increase its export of 1.1 million barrels of oil per day by 500,000 soon, followed by a further 500,000 bpd thereafter, thus adding to the supply glut that has resulted in global prices plunging in a year from levels of $120-$130 a barrel to below $30.

Marking a 13-year low, the price of the Organisation of Petroleum Exporting Countries (OPEC) basket of twelve crudes stood at $24.74 a barrel on Friday, compared to $25 on the previous day, the organisation's secretariat said.

The prospect of Iran doubling its crude oil exports has provoked the continuing fall in oil prices with UK Brent crude closing trade on Friday below $29 a barrel.