Despite US sanctions India to buy 25 MT of crude oil from Iran this year

Oct 08, 2018: Oil Minister Dharmendra Pradhan Monday said two state refiners have placed orders for importing crude oil from Iran in November, which shows Indias policy shifting and independent international positioning beyond the control of USA sanctions regime.

After overlooking American sanction on purchasing Russian Missile system, India stepped ahead to disclose that it is going to purchase Iranian Oil and payment shall be through Indian currency, which was earlier through Europian- Euro Banking channel.

The Minister said “We will be guided by our national interest,” he said. Indian Oil Corp (IOC) Chairman Sanjiv Singh said his company is among the two which have placed order for November. “We have ordered for our usual quantity of oil,” he said. IOC and Mangalore Refinery and Petrochemicals Ltd (MRPL) together have placed order for 1.25 million tonne (MT) of crude oil from Iran. Singh said options for paying for Iranian oil are under discussions.

US sanctions against Iran will kick in from November 4, which will block payment routes. Paying in rupee is an option. Iran can use the rupee to settle its imports of pharmaceuticals and other goods from India. “Even without sanctions also, Iran had been accepting payments in rupee. So let us see how it evolves,” he said. While India wants to continue importing Iranian oil, albeit a reduced volume, US Secretary of State Mike Pompeo last month stated that Washington would consider waivers on the embargo but made it clear that these would be time-limited, if granted.

India had planned to import about 25 MT of crude oil from Iran in 2018-19, up from 22.6 MT imported in 2017-18. But the actual volumes imported may be far less as companies like Reliance Industries have totally stopped buying oil from Iran and others too are scaling it down in hope of winning a sanction waiver from the US. Nayara Energy, formerly Essar Oil, too is stopping import from the Persian Gulf nation.

Iran is India’s third-largest oil supplier behind Iraq and Saudi Arabia. It was India’s second biggest supplier of crude oil after Saudi Arabia till 2010-11 but Western sanctions over its suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 MT and 10.95 MT respectively from it.

Washington has been asking buyers of Iranian oil to slash imports to zero to force Tehran to negotiate a new nuclear agreement.