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Iran Oil Imports: India ‘Cautiously Optimistic’ On US Sanctions

Anxiety keeps mounting as November 4 is just a few steps away and it is not clear what stand US will take towards India if it does not cut down Iranian crude import. India hopes that US will not take a tough stand.

Caught between the US and Iran, India is ‘cautiously optimistic’ about not attracting secondary sanctions from Washington for continuing to import oil from the Islamic nation beyond November 4. And this optimism is felt from the talks Indian officials India had with US officials, according to an official; however, India has to be cautious “ as it all boils down to the will of one powerful person in the US.”

With November 4 sanctions, making payment for oil bought from Iran will become difficult as they will block banking channels and also the reinsurance cover will not be available.

Apart from India, Iran exports crude oil to the EU, China, South Korea, Turkey and Japan. Indian refiners, however, have not signed any new contract with Iran. Their existing contracts run till March/April 2019.

PSU refineries have booked imports for November, and it is expected that they will keep their purchase agreements for December as well.

Rupee payment is a way out, as a source has said; and, as a senior executive of a domestic oil refinery said, the rupee payment mechanism is already in place. And, as the source said, some payment can be done as a trade-off (barter). For instance, Iran can buy medicines or infrastructure projects or petroleum products from India for the remaining amount.”

India usually honours only sanctions declared by the UN.

At present, PSU oil refiners have booked imports of 1.25 million tonnes (mt) of crude oil from Iran for November.

“But the mode of payment was not discussed, as the existing rupee mechanism can be used when there is no alternative,” said the oil company executive.

“India cannot bring down its oil imports from Iran to zero as some contracts are already in place and the country remains a cheap and reliable supplier of crude for us,” said an official.

“We have always been open to alternative suppliers, but they should be equally good, if not better, as our national interest is our chief concern. The US understands our position and we hope no drastic action will be taken.”

Last fiscal, India bought about 22 million tonnes of oil from Iran, or almost 10 per cent of its total imports.


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