THE IRAN EQUATION
COMPLEXITIES RELATING to Iran will stay contentious. As New Delhi is finalises its agenda for the first 2 + 2 dialogue between India’s Foreign Minister and Defence Minister with their American counterparts, officials are looking for a window allowing India to reduce Iranian oil imports to last years numbers.
US Sanctions require India to cut all supply from Iran by November 4; but it is difficult to replace oil from Iran –the second largest supplier after Iraq—roughly 457,000 barrels a day in Q1 FY 2018/19, with a peak in May of 771,000 barrels a day imports. After doubling (Q-Q) from Q1 FY 2017/18 imports of 279,000 barrels, India started cutting imports by 66,000 barrels.
Saudi Arabia in a bid to regain its market share lost to Iran (when the latter offered steeper discounts), has offered to ramp up production. But Iran is critical to New Delhi’s larger strategy in the sub-continent to counter China. For now, it’s wait and watch.