Is India considering resuming crude oil imports from Iran as Donald Trump pauses war? What is Modi’s fresh plan?

In 2018, sanctions were tightened on Iranian oil, and imports were halted from May 2019. In its place, India began importing crude from West Asia, the United States, and other sources.

New Delhi: The Modi government appears to be working on a strategy around Iranian oil. According to the reports, India is considering resuming crude oil imports from Iran. As per a Navbharat Times report, quoting a senior government official, both technical and commercial feasibility will be assessed. However, it is important to note that the mode of payment is not yet clear. The statement comes after President Donald Trump declared the temporary easing of US sanctions on Iran aimed at reducing pressure on oil prices.

The development has emerged at a time when US President Donald Trump has extended the deadline given to Iran to reopen the Strait of Hormuz. He also announced that the US would not carry out attacks on Iranian power plants for five days.

India Has Been a Buyer of Iranian Oil

It is important to note that India has been a major buyer of Iranian crude oil. The oil from Iran has suited Indian refineries well, and the trade terms were also favorable. As a result, India used to import significant quantities of both Iranian light and heavy grades of crude.

In 2018, sanctions were tightened on Iranian oil, and imports were halted from May 2019. In its place, India began importing crude from West Asia, the United States, and other sources. Iranian crude accounted for 11.5 percent of India’s total oil imports at that time.

Add India.com as a Preferred Source

While addressing the media, Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, said while briefing on the ongoing developments in West Asia that any decision to resume purchases of Iranian crude would be based on techno-commercial feasibility.

She said, “It is based on techno-commercial feasibility.”

US Grants Temporary Relief on Sanctions for Iranian Oil

As part of its efforts to ease rising oil prices amid the ongoing conflict in West Asia, the Donald Trump-led US government has recently lifted sanctions on the purchase of Iranian oil for 30 days. As per the estimates, around 140 million barrels of Iranian oil are currently stored on ships at sea. Notably, while this relief allows countries to buy Iranian oil, the payment mechanism remains unclear.

Iran is still cut off from SWIFT (Society for Worldwide Interbank Financial Telecommunication), a global messaging system used by banks and financial institutions to securely exchange information about financial transactions. As per the reports, the last purchases were made in euros, with a Turkish bank acting as an intermediary. However, this option is no longer available.

Sanctions Have Severely Hit Iran

In March 2012, Iran was disconnected from SWIFT, following the sanctions imposed by the European Union over its nuclear program. As a result, several Iranian banks were also cut off. The situation worsened after the US reimposed sanctions in 2018, leading to further suspensions of Iranian banks from the network.

This significantly restricted Iran’s ability to conduct international trade, receive payments for oil, and access foreign exchange reserves. Kpler analyst Sumit Ritolia said that along with Chinese buyers and other Asian countries, India could emerge as a major demand center for Iranian crude.

He added, “Currently, the availability of Iranian crude remains high, with an estimated 170 million barrels in stock, including floating storage and cargoes in transit.”

Source link

The Times Of Bengal