India is working to ensure that its bilateral ties with Iran suffer no structural damage, even as New Delhi seeks to find a way to deal with the unilateral sanctions that the US has imposed on the Gulf nation.
“India cannot afford to end its trade ties with Iran under any kind of pressure. We are talking to European Union members to find a way out, apart from trying to impress upon the US that blanket economic sanctions will have negative implications for the Indian economy,” said an official involved with the developments.
In fact, India may bring up the issue when US Secretary of State Michael R Pompeo and Defence Secretary James Mattis call on their Indian counterparts , Sushma Swaraj and Nirmala Sitharaman, respectively, during their official visit in September, another official told
On May 8, the US had announced that it would withdraw from the joint comprehensive plan of action (JCPOA) with Iran — widely known as the ‘Iran nuclear deal’ — and re-impose sanctions on any trade, including petroleum-related transactions, involving the Islamic Republic.
India maintains that the Iranian nuclear issue should be resolved through dialogue and diplomacy. Indian refiners import crude oil from many countries, including Iran, based on technical and commercial considerations.
“Whatever decision is taken about Iran, the country’s (India’s) crude supplies are secure. It is a diverse energy basket through spot and term contracts,” said Sanjiv Singh, Chairman IndianOil Corporation.
IOCL’s main supplier is Iraq, followed by Saudi Arabia and Iran. However, the line of credit (LoC) that Iran provides makes its crude most attractive for Indian refiners in the volatile crude market, said an oil trader.
When asked if it made sense for India to carve out its own bilateral deals with Iran to continue with the oil supplies, Christopher McKee, CEO of PRS Group, the New York-based risk rating and forecasting firm, said the past few months had shown clearly that the US had been ripping up the rule book on globaltrade negotiations. “In the free-for-all that has effectively replaced the WTO, it’s a fight of the fittest. India, as one of the great emerging economies of the world, and soon to be the largest nation on the planet, should certainly be taking this as its cue to forge more of its own bilateral trade relationships. It has the world to choose from — everyone from post-Brexit UK to Israel is courting India right now. Trade deals will help resolve tariffs at India’s ports and the associated delays and corruption,” he said.
On whether India is today in a position to strike similar deals with other oil-producing nations, he said, “We’re in a world of rising interest rates, weakening emerging market currencies and growing geopolitical risk. In this context, Indian credit lines will be increasingly valued. It isn’t hard to identify energy exporters with a growing need for credit and trade relationships right now: Iraq, Qatar, Libya, Nigeria, Mozambique and Venezuela, to name but a few.”