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India’s call on US sanctions against Iran oil will be in national interest, says Petroleum Minister Pradhan

Petroleum Minister Dharmendra Pradhan has said India sees the US sanctions on Iran as a challenge’ given its close ties with both countries, but will take a ‘considered view, based on national interest besides finding way out to secure the country’s energy needs:

His non committal remarks came a week before a US expert-level delegation arrives in India, on July 16 and 17, to discuss sanctions with Petroleum Ministry and Ministry of External Affairs experts and share each other’s perspective on its impact on global oil markets.

Experts however feel that India has no option but to curtail oil imports from Iran especially after the US envoy to United Nation who met Prime Minister Modi last week is understood to have told him in no unmistaken terms to stop supplies from Iran before November fourth. She is also understood to have told the prime minister that the current US regime has no plans to give exemption to its allies in so far as dealing with sanctions on Iran.

India, led by private players including Reliance Industries, purchased around 10 per cent of its crude oil requirement from Iran in 2016-17, but the figure has risen to 18 per cent this year with 33 million tons of crude being imported.

The Petroleum minister emphasized that India has special strategic relationship with US, but a historic, cultural and Civilisational relationship with Iran. Iran is also a factor in India-Afghanistan relationship because of its geographic proximity. India is also running a terminal at Iranian port of Cahabar to facilitate a gateway to Afghanistan bypassing Pakistan. It has invested about one hundred million dollars in this project so that India could provide supplies to Afghanistan without any help from Pakistan. The fate of the terminal also has to be decided if the US sanctions kick in.

Our economic interests are tied to both. The government will take a comprehensive view in the matter the minister said while talking to newspersons. The government has a considered view. National interest is paramount and we will align our decision on that.”

The government has no intention to give knee jerk reaction but is working on an action plan taking into account that US sanctions kick in on November four. The Minister was not inclined go beyond this official position. Meanwhile China a victim of the trade war unleashed by the United States has decided to stop oil imports from US and increase imports from Iran.

The Petroleum Ministry is worried about rising crude oil prices and its impact on the US dollar as well as on the domestic price situation. The crude oil price per barrel is today is hovering around USD 77 and expected to go up further with all the consumers watching the impact of US sanctions on Iran. An expert has predicted that oil prices could shoot up to r250 US dollars per barrel if Iranian navy decides to strike and effect blockade of Gulf of Hormuz\. IN such an eventuality oil and gas supplies from UAE, Bahrain, Qatar and Kuwait will be blocked. A US Naval official from the Central command said they will not allow Iran to effect a blockade.

Between 2012 and 2015, when the US — along with Europe — had last imposed sanctions on Iran, India had brought down its crude oil imports from Iran. India initially used a Turkish bank to pay Iran for the oil it bought but also began using the Rupee-Rial mechanism. .

Although India is again willing to reduce its oil dependency on Tehran over a period of time after the sanctions kick in on November 4, the Modi government wants to discuss the entire issue with Trump administration representatives. Given the large amount of oil imports from Iran, about 33 Milllion Tns, India would be seeking help from the US for alternative oil supplies with an eye on global prices. The alternative source of supply could be Saudi Arabia or United States.

 

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