Update : Iranian Oil in India

Contrary to the popular perception, India has not completely stopped the import of Iranian Oil in line with the sanctions imposed on Iran by the United States.

The response was given by the Minister of State of External Affairs, V. Muraleedharan in the Lok Sabha. However, his response is inconsistent with Prime Minister Modi’s previous declaration to US President Donald Trump at the G20 summit where he had affirmed to India’s plans to reduce Iranian Oil Imports to “zero out” Iranian oil imports.

What has happened?

• While there are no plans currently to stop the oil imports from Iran, the volume of imports has in fact reduced significantly and no new order of oil has been placed by any Indian Company since May 2.
• However, officials in both India and Iran claim that this is temporary and would only persist till alternative payment methods are devised.
• India has earlier stated that it would never abide by the unilateral sanctions imposed the United States and would follow only the UN-Sanctions.
• India is one of the largest buyers of Iranian oil and Iran is India’s major trading partner.
• 82% of the oil needed for consumption by India is imported and of this, Iranian oil consistently makes up 10-15%.
• Other suppliers of Oil to India are Iraq, Saudi Arabia, United Arab Emirates and Veneuzuala.
• While Saudi Arabia was earlier India’s largest oil supplier, Iraq is now India’s largest oil supplier.
• Even in earlier sanctions, India and Iran had deployed an alternative payment method by maintaining Iranian funds in an Indian bank with minimal exposure to carry out the transactions.

What lies ahead?

India needs energy and lots of it. It can not rely on blank assurances from the US to make up for its energy deficit if Iranian Oil imports are stopped. Iran is also located closer to India than the US. India must get its act together and sit with the world governments to sort out this issue between Iran and the US, once and for all.