Limited crude import from Iran to stay

India is willing to cut the import of crude oil from Iran but not totally stop purchases from its western neighbour as it wants to build up strategic reserves and underscore its independence of action.

By Jayanta Roy Chowdhury & R. Suryamurthy
  • Published 7.09.18
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New Delhi: India is willing to cut the import of crude oil from Iran but not totally stop purchases from its western neighbour as it wants to build up strategic reserves and underscore its independence of action.

In talks held on Thursday, the Americans on their part have let it be known that they would give more time to India to manage its oil issues with Iran but would want New Delhi to eventually stop imports and have offered US crude as part-replacement.

"We have told the Indians consistently, as we have told every nation, that on November 4 the sanctions with respect to Iranian crude oil will be enforced, and that we will consider waivers where appropriate, but that it is our expectation that the purchases of Iranian crude oil will go to zero from every country," US secretary of state Mike Pompeo said after the meeting.

Foreign minister Sushma Swaraj and defence minister Nirmala Sitharaman are holding talks with Pompeo and US defence secretary Jim Mattis as part of a dialogue covering defence, strategic and economic issues.

Pompeo offered US crude as replacement to Iranian oil. "And from whence they purchase the other crude oil, we're happy to see if it's American products that are able to deliver for them. I think that'd be a great outcome," the secretary of state said.

As a buyer, India is Iran's second largest oil customer after China; whereas as a seller, Iran is the third-largest supplier of crude.

Sources said Tehran had offered its tankers as well as easy insurance and credit terms as global and Indian shippers and insurers were unwilling to participate in trade with Iran, fearing US sanctions. Tehran has offered similar facilities to China.

"Earlier too when the US had come out with sanctions we had explained our position and we are reiterating that again. The US-India relationship is a mature one and we are sure the Americans will understand our nuanced position," officials said.

India has already started cutting crude imports from Iran - down to 203,938 barrels per day (bpd) in the period August 1-16 compared with 706,452bpd in July, according to Platts trade flow data.

Officials said India could use the euro as well as the rupee trade route for Iran oil.

India has given permission to Iranian private lender Bank Pasargad to open a branch in Mumbai, which could also be used to make payment.

The presence of the Iranian bank would help both the parties as it would enable rupee trading as exporters can make payment in that bank.