US sanctions kick in, India can buy Iran oil for now

India, which is the second biggest buyer of Iranian oil, is being pushed by the US to restrict its monthly purchase to 1.25 million tonnes or 15 million tonnes in a year, down from 22.6 million tonnes bought in 2017-18 financial year.

Written by Shubhajit Roy | New Delhi | Updated: November 6, 2018 7:18:45 am
US sanctions on Iran, Iran oil, Iran oil buyers, India oil import, US-Iran, India-US, India news, Indian express New Delhi had pushed back on zero oil imports, citing its adverse fallout on the economy and the inflationary impact it would have.

The Trump administration Monday named India among eight countries granted temporary exemption for buying Iranian oil as the US imposed its toughest sanctions till date against Tehran.

There was no immediate statement from the Ministry of External Affairs but sources in New Delhi said this was the result of hectic negotiations over the last six months with US officials.

India, China, Japan, Italy, Greece, South Korea, Taiwan and Turkey make the list of eight countries granted temporary waiver for purchase of Iranian oil. US Secretary of State Michael R Pompeo said these countries have shown significant reduction in oil purchase from Iran.

Read | Oil prices fall as US grants Iran sanction waivers to eight countries

Pompeo promised that the US will be “relentless” in pressuring Iran as he announced the temporary exemption list. The sanctions cover Iran’s banking and energy sectors and reinstate penalties for countries and companies in Europe, Asia and elsewhere that do not halt Iranian oil imports.

India, which is the second biggest buyer of Iranian oil after China, is being pushed by the US to restrict its monthly purchase to 1.25 million tonnes or 15 million tonnes in a year (300,000 barrels per day), down from 22.6 million tonnes (452,000 barrels per day) bought in 2017-18 financial year, according to sources.

New Delhi had pushed back on zero oil imports, citing its adverse fallout on the economy and the inflationary impact it would have.

Also Read | Iran president Rouhani says will ‘proudly bypass’ US sanctions

In September this year, during the Indo-US 2+2 dialogue, the US had told the Indian side that it was not in Washington’s interest to damage the Indian economy. External Affairs minister Sushma Swaraj and Pompeo had discussed the issue of oil imports from Iran.

During the dialogue, the Indian side had “frankly” put across their position on oil imports from Iran. “We told them that we are an energy-reliant country, and candidly told them that rapid reduction of oil imports from Iran will impact our economy. We said that our economy should not be impacted by your policies,” sources said.

According to sources, the US side replied they “fully understand”, and that it is “our policy”, but “it is not in our interest to damage your economy”.

Last week, the Ministry of External Affairs’ official spokesperson Raveesh Kumar said: “We have had several rounds of conversation not only with the US but also with Iran and other stakeholders. And as far as the US is concerned, they are well aware about our expectations of the requirement which we have for oil domestically and which is very critical for sustaining our economic growth.”

India is the world’s third-largest consumer of oil, with 85 per cent of its crude oil and 34 per cent of its natural gas requirements being fulfilled by imports. In 2016, India imported 215 million tonnes of crude oil and at 13 per cent, Iran stood third among India’s biggest oil suppliers, after Saudi Arabia and Iraq at 18 percent each.

Even during the last set of sanctions between 2012 and 2015, India had continued to import oil from Iran. Although the value of oil imports had dipped from USD 11.6 billion in 2011-2012 to USD 4.3 billion in 2015-16, it had again climbed to USD 8.9 billion in 2017-18.

New Delhi will have to navigate the issue of oil imports with its strategic interests with the US. The re-imposition of sanctions does not just impact oil imports, but will also impact the Chabahar port development. India considers the port in Iran as one of strategic value because it allows it access to Afghanistan and Central Asia.

For all the latest India News, download Indian Express App

Advertisement
Advertisement
Advertisement
Advertisement