US curbs unlikely to hurt India’s oil import from Iran

The US decision to reinstate financial sanctions on Iran will not impact India's oil imports from Tehran as long as European countries don't follow suit, officials said on Wednesday.

India pays its third largest oil supplier in euros using European banking channels and unless these are blocked, imports will continue, they said.

US President Donald Trump on Tuesday announced that the US will withdraw from the landmark 2015 accord to curb Iran's nuclear program and reinstate financial sanctions on the Persian Gulf nation.

Soon after the announcement, oil prices rebounded to trade at the highest level since 2014 with Brent crude oil climbing 2.5 per cent to $76.75.

"Immediately there will be no impact but we have to wait and watch how other nations particularly the European block, react," said A K Sharma, Director (Finance) of Indian Oil Corp (IOC), the country's largest oil firm. If the European Union (EU) were to continue status quo and not re-impose sanctions, Iranian supplies to India will continue unhindered, he said.

But paying Iran for the oil India buys would become difficult in case European countries join the US and impose financial sanctions and block banking channels, he said.

French President Emmanuel Macron, who personally lobbied Trump to remain in the deal during a state visit to Washington last month, said: "France, Germany, and the UK regret the US decision to leave the JCPOA."

Iran is India's third-largest oil supplier behind Iraq and Saudi Arabia. It supplied 18.4 million tonne 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 201011 but western sanctions over its suspected nuclear programme relegated it to the 7th spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 MT and 10.95 MT, respectively from it.

Sourcing from Iran increased to 12.7 MT in 2015-16, giving it the sixth spot.