Bargaining ploy to get Iran oil

The Centre is working on a negotiation strategy on Iran oil with the US ahead of the crucial bilateral talks between the two countries.

By Our Special Correspondent
  • Published 6.09.18

New Delhi: The Centre is working on a negotiation strategy on Iran oil with the US ahead of the crucial bilateral talks between the two countries.

The game plan is to cite China's decision to stop crude purchases from Washington and extract concession so that India can continue to buy crude from Iran.

Iran is offering to supply crude in its own ships as well as provide insurance cover and easy credit terms.

India is looking to leverage the Chinese move against the Americans to get an waiver from Washington and buy crude from Iran even beyond November 4, when the US sanctions on Iran start.

US defence secretary James Mattis and secretary of state Michael Pompeo are scheduled to hold discussions with their Indian counterparts Nirmala Sitharaman and Sushma Swaraj here, under the "2+2 dialogue" that will cover a wide range of bilateral, regional and global issues.

Sources said the state-owned firms have been asked to continue the purchase of Iranian oil as the terms are too good to resist. Iran has offered lucrative terms for its crude by transporting it in its own ships, covered by their insurance and easy credit terms.

Officials are hopeful that China's decision to continue buying Iranian crude and stop buying US crude opens up an opportunity for India to take advantage of the situation.

The officials are mulling a quid pro quo deal under which India will buy crude from the US and gradually lower shipments from Iran, though the purchases will continue beyond November.

It could also offer to buy more oil from the US as part of an effort to lower the trade gap, which is in favour of India, and diversify energy sourcing, the officials said.

The country has taken steps to increase imports from the US, which helped to narrow the gap by over $1 billion last year and import oil worth $2.5 billion from Washington this year.

India is one of the very few countries with which US's goods trade gap has decreased in the last one year - by almost 6 per cent to $22.9 billion in 2017.

In fact, India's goods imports from the US jumped a massive 38 per cent in the first quarter of this fiscal to $8.53 billion and the US emerged as India's second-biggest importer after China. At the same time, exports to the US grew only 11.7 per cent in the June quarter.

Flexible approach

New Delhi is hopeful that the US will be flexible in its approach as it realises that Iran is a major supplier of crude to many countries, including India, and it may not be feasible for them to stop imports completely.

"The US realises that it might not be possible for other suppliers like Saudi Arabia to fill the gap completely if countries like India stop their sourcing from Iran," the officials said.