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In an attempt to force economic pressure on Iran due to the conflict over its nuclear regime, the US has imposed sanctions demanding that countries significantly reduce trade of Iranian oil during the first half of 2012. Failure to comply with these sanctions by an organisation will result in them being banned from the US banking system.
India has failed to reduce its purchases of Iranian oil, and has therefore failed to comply with the US sanctions. President Obama may now be forced to impose his sanctions on one of the largest economic powers in Asia. His decision could come as early as 28th June.
The Indian government hasn’t actually asked any of its refiners to halt trade with Iran. It just requested that they look for alternative supplies in an attempt to gradually reduce dealings with the Persian state. The problem is however, that annual crude oil contracts usually run from April to March. India has said that when the new contracts start they will then look to introduce reductions.
The US has even offered its help in searching for and negotiating with alternative suppliers such as Iraq and Saudi Arabia.
According to two officials, as the new contracts start to take effect next month, the largest Indian buyer of Iranian oil, state-owned Mangalore Refinery & Petrochemicals Ltd., has made plans to import less crude from Iran.
However, Oil Minister S. Jaipal Reddy, Finance Minister Pranab Mukherjee and Foreign Secretary Ranjan Mathai have all declared that India will continue to buy Iranian oil to fuel its expanding economy. India has, and will, always support UN sanctions, but objects to sanctions from individual countries.
The US Energy Information Administration says that India bought an average of 328,000 barrels a day from Iran during the first six months of last year. This year that volume has sharply increased.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com