Indian firms to come up with options after US calls for cut in Iran oil imports

RSTV Bureau
Image: PTI

Image: PTI

Days after reports of US asking several countries, including India, to cut oil imports from Iran, the government has asked its oil firms to prepare a blueprint of alternatives sources. The US had sought an ending of oil imports from Iran by November 4, as per the statement made by the US state department officials.

While New Delhi says it does not recognise unilateral restrictions imposed by the US on any country and instead follows UN sanctions, oil firms have been asked to be prepared for channels to pay for Iranian oil getting blocked by November, following sanctions against the Persian Gulf nation, Indian officials said.

Imports from Iran, which currently is India’s third largest supplier of oil after Iraq and Saudi Arabia, are likely to come down and will have to be replaced with more purchases from Saudi Arabia and Kuwait, they said.

The Trump administration is piling pressure on India, China, and other buyers to end all imports of Iranian oil by a November 4 deadline as it looks to choke the Persian Gulf state’s economic lifeline with sanctions over its nuclear programme.

While a final view on the US asking India and China to cut Iranian oil imports has not yet been taken, the petroleum ministry has asked refiners to tread cautiously and start looking at alternatives.

Oil Minister Dharmendra Pradhan in Mumbai said India will decide on Iranian imports keeping its best interest in mind.

“Our basket (of crude imports) has become multi-country. There may be no country in the world that we have a problem getting oil from. We buy from Latin America, we buy from Brunei. When the US became an exporter, Indian companies were first to buy,” Pradhan told reporters on sidelines of an industry event in Mumbai.

India, he said, is keeping its basket of imports open and will buy oil at competitive prices. “When we decide on Iran we will inform you,” he said.

“India is a stable market and a mature democracy. We have a vigilant leadership. We go by our interests.” Bringing down imports to zero, as desired by the US, may however not be feasible, officials said.

Oil ministry held discussions with oil refiners and will follow them up with meetings with external affairs ministry next week. “Clarity will emerge in one week’s time,” an official said. Replacing Iranian oil will not be a problem but margins will be hit as Tehran offers the best commercial terms, another official said.

Haley, who is on a three-day visit here, said India should reconsider it’s relationship with Tehran in the wake of that country’s violations of various UN resolutions.

“All of us have to rethink who we choose to do business with. I think as a friend India should also decide is this a country they want to continue doing business with? So, yes, I had that conversation with PM Modi,” she told NDTV in an interview.

“It was a constructive conversation. I think for the future of India, future of resources, we would encourage them to rethink their relationship with Iran,” she said.

Separately, in an address at a think-tank, Haley said the US would continue to try and work with its partners and allies to make sure that Iran was being pushed to be a good, accountable international neighbour.

She said the US strongly believes that Iran is a “threat” and it cannot take its eyes off the country.

“We don’t believe this because of some ideas but we believe because there is proof that in spite of the Iran (nuclear) deal, still with all of those incentives, they continue to violate resolution after resolution.

“Just because countries came to have deal (with Iran), doesn’t mean we should be blind to these violations,” she said.

The US, which last month pulled out of a landmark nuclear deal and said sanctions will be re-imposed on Iran within 180 days, has threatened to cut off access to the American banking system for foreign financial institutions that trade with Iran.

Iran supplied 18.4 million tonnes of crude oil during April 2017 and January 2018 (first 10 months of 2017-18 fiscal).

Iran was India’s second biggest supplier of crude oil after Saudi Arabia till 2010-11 but western sanctions over its suspected nuclear programme pushed it to the 7th spot in the subsequent years. Sourcing from Iran increased following lifting of sanctions.

(With inputs from PTI)