Won’t be able to cut oil imports from Iran, India likely to tell US

India will likely tell the US that it won’t be able to cut oil imports from Iran after sanctions take effect early November and hopes to “sensitise’’ Washington to the issues faced by the country in this regard, while making it clear that no nation can dictate how its external policy can be run. The foreign and defence ministers of India and the US are meeting in New Delhi on Thursday under the 2 + 2 dialogue to discuss a range of bilateral, regional and global issues. India’s refineries are heavily dependent on supplies from overseas, including Iran, and giving up this cheaper option will be tough when retail prices of fuels are at an all-time high in the country, according to people familiar with the plan. “We want to make the point that India is heavily reliant on oil imports for its consumption needs and 83% of its oil comes from external sources,” an official noted. India will also want to discuss alternative sources of oil with a focus on prices. “Pricing of oil imports is very important for India as a number of factors such as economic growth and inflationary trends are tied to it,” the official said. On US concerns over the trade deficit with India, New Delhi plans to highlight the steps taken to increase imports from the country, which helped narrow the gap by over $1 billion last year. “We will be importing oil worth $2.5 billion from the US this year. Washington has to appreciate these efforts being made by India,” the official said. Some of the US sanctions on Iran took effect early August, while others, mainly related to the petroleum sector, will kick off after November 4. The US is willing to offer a waiver to countries that make a “significant” reduction in imports. Without this exemption, countries dealing with Iran after the deadline will risk getting cut off from the US financial system. India has been seeking a waiver from the US, although it is unwilling to reduce imports anytime soon. “India will not cut import of Iranian oil. If there is some import reduction after November 4, that would be purely due to logistics or operation hurdles such as lack of tankers or insurance or reinsurance,” one person said. If India continues to import oil from Iran, it will have to find a way to pay for the supplies because the State Bank of India has already told refiners it can’t support Iranian purchases during sanctions. The government is yet to identify a bank that can be used to channel Iranian oil payments. India imports a tenth of its crude oil from Iran and is the biggest buyer of crude from the Islamic Republic after China. There is also the problem of making technical adjustments to refineries if a new form of crude oil is imported as it would require time, effort and resources. Source: Economic Times