Centre may reduce Iran oil imports after US sanctions
NEWDELHI: India’s oil ministry has asked refiners to prepare for a ‘drastic reduction or zero’ imports of Iranian oil from November, two industry sources said, the first sign that New Delhi is responding to a push by the United States to cut trade ties with Iran.
India has said it does not recognise unilateral restrictions imposed by the United States, and instead follows UN sanctions. But the industry sources said India, the biggest buyer of Iranian oil after China, will be forced to take action to protect its exposure to the US financial system. India’s oil ministry held a meeting with refiners on Thursday, urging them to scout for alternatives to Iranian oil, the sources said. “(India) has asked refiners to be prepared for any eventuality, since the situation is still evolving. There could be drastic reduction or there could be no import at all,” said one of the sources, who has knowledge of the matter.
Indian oil minister Dharmendra Pradhan told reporters in Mumbai that the country would attend to its interests while deciding on oil imports. “We know (that) to have a healthy energy mix, we can get oil from anywhere.
The rest depends on geopolitics, and those decisions will be taken based on the situations,” he said. During the previous round of sanctions, India was one of the few countries that continued to buy Iranian oil, although it had to reduce imports as shipping, insurance and banking channels were choked due to the European and U.S. sanctions.
The source said this time the situation is different.
“You have India, China and Europe on one side, and US on the other... At this moment we really don’t know what to do, but at the same time we have to prepare ourselves to face any eventuality,” said the source.
While a State Department official has said that Washington wants Iranian oil buyers to halt imports from November, US Ambassador to the United Nations (UN) Nikki Haley has told Prime Minister Narendra Modi to lessen dependence on Iranian oil. The US push to curb countries’ imports of Iranian oil comes after President Donald Trump withdrew from a 2015 deal between Iran and six world powers and ordered a reimposition of sanctions on Tehran.
OPEC’S OUTPUT BOOST
Under pressure from the US sanctions, Reliance Industries Ltd, the operator of the world’s biggest refining complex, has decided to halt imports.
Nayara Energy, an Indian company promoted by Russian oil major Rosneft, is also preparing to halt Iranian oil imports from November after a communication from the government, a second source said. The company has already started cutting its oil imports from this month.
Removing Iranian oil from the global market by November as called for by the United States is impossible, an Iranian oil official told the semi-official Tasnim news agency on Wednesday.
The options to find replacements to Iranian oil have widened after Organization of the Petroleum Exporting Countries (OPEC) agreed with Russia and other oil-producing allies to raise output from July by about 1 million bpd, with Saudi Arabia pledging a “measurable” supply boost. The second source said there were plenty of options available in the market to replace Iranian oil.