- Complying with the U.S. sanctions on Iran will force India — the world’s third-largest oil importer and the second-largest buyer of Iranian crude after China — to find new sources of crude at higher prices.
- Top U.S. and Indian officials met in Delhi Thursday, as Washington reiterated its sanctions demands but suggested waivers to give India time to wind down their Iranian oil purchases.
- Some India officials have said that completely cutting Iranian imports will be impossible, especially at a time of rising global oil prices and a weakening national currency.
NEW DELHI (Reuters) – India hopes to secure a waiver from U.S. sanctions on Iran before they take effect on Nov. 4, as it had significantly cut Iranian oil imports before the deadline, officials said on Monday.
At a time of rising oil prices globally and a weakening national currency amid an emerging markets sell-off, this is going to hurt.
Washington may grant waivers for major importers of Iranian crude but still expects them to ultimately comply with sanctions, top U.S. officials said. Discussions on the issue, as well as on security issues and trade more generally, took place Thursday as the U.S. Secretaries of Defense and State, James Mattis and Mike Pompeo, met with their Indian counterparts in Delhi.
“We will consider waivers where appropriate but that it is our expectation that the purchases of Iranian crude oil will go to zero from every country or sanctions will be imposed. So we’ll work with the Indians, we committed that we will do that,” Pompeo told press at the summit.
India imports 70 percent of its energy needs, and fuel costs are hitting multi-year highs in the rapidly growing country of 1.3 billion people. And the rupee fell to a record low against the dollar this week as rising global interest rates and trade war fears rock emerging market currencies across the board.
This, combined with the elimination of a major source of cheap crude, could have significant impacts on India’s inflation and economic growth.
“We want to make the point that India is heavily reliant on oil imports for its consumption needs and 83 percent of its oil comes from external sources,” one Indian official was quoted as saying in local Indian newspaper The Economic Times. Other senior officials have said outright that the country will not fully cut their Iranian imports and that doing so would be impossible.
CUTTING IMPORTS NEARLY IN HALF
India lifted about 658,000 barrel of oil per day (bpd) from Iran in April-August, according to data obtained from trade sources by Reuters, and the cuts projected for September and October would drop the daily average over those two months by about 45 per cent to 360,000-370,000 bpd.
Indian oil refiners have already given the October loading plans to the National Iranian Oil Co (NIOC), sources familiar with the loading schedule said.
Top refiner Indian Oil Corp wants to lift 6 million barrels each in September and October, while Mangalore Refinery and Petrochemicals would load 3 million barrels each for those two months, the sources said.
IOC would also lift 1 million barrel for its subsidiary Chennai Petroleum Corp in October, they said.
Bharat Petroleum Corp would lift 1 million barrels in September and skip purchases in October, a company source said on Tuesday.
Bharat Petroleum has already drawn more than its fixed volumes – the amount it is obligated to purchase – that were contracted for 2018/19, its chairman said on Tuesday.
Nayara Energy, part owned by Russian oil giant Rosneft , plans to lift 1 million barrels each in September and October, the sources said. But the refiner began reducing its oil imports from Iran in June and aims to completely halt purchases from November.
Hindustan Petroleum, Reliance Industries and HPCL Mittal Energy (HMEL) have no plans to buy from Iran in September and October, they said.
India refiners – excluding Reliance and HMEL, which do not have term contracts with Iran – will together lift about 73 per cent of their fixed contract volumes from Iran by end-October, the loading data showed.
IOC, Nayara and MRPL did not respond to Reuters’ emails seeking comments.