India’s oil minister Dharmendra Pradhan has announced that two Indian oil companies, Indian Oil and Mangalore Refineries and Petrochemicals, have placed orders for Iranian crude next month, despite US President Donald Trump’s threat of sanctions.
The sanctions, expected to enter into force on 4 November, are an attempt to cut off Iran politically and restrict demand for the nation’s oil.
The Trump administration is increasing pressure on international governments and oil companies to completely eradicate their imports of Iranian crude.
Pradhan said at The Energy Forum in New Delhi on Monday that he did not know if India – the world’s third largest oil importer – would receive a waiver from the US, adding that he could evolve a strategy to circumvent the sanctions.
A source from Reuters, who wished to remain anonymous, said: “It is still early to say how India will settle its trade with Iran,” adding that it was possible for India to buy Iranian crude using Indian Rupees and not the US Dollar, which is currently the dominant currency in the oil trade.
Speaking to press at the 2+2 summit in Delhi last month, US Secretary of State Mike Pompeo said: “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.”
This month, Indian oil companies imported a total of around ten million barrels from Iran. For November, Indian Oil has planned to procure six million barrels, while Mangalore is expected to import three million barrels, according to the Reuters source.
UK-based PVM Oil Associates oil analyst Steven Brennock told CNBC: “My personal opinion is that it will be very difficult for India and other buyers of Iranian crude to halt all imports. That said, if recent evidence is anything to go by, shipments will have fallen significantly by the time we reach the November 4 deadline.”
During the last set of US sanctions on Iran, India maintained its importation of Iranian crude, although the level of imports decreased from around $13bn in 2012 to just over $6bn in 2016, according to data from India’s ministry of commerce and industry.