In the last 24 hours there have been two fascinating media reports about the Iran sanctions: one is a Bloomberg story saying Indian refiners will not buy any Iranian crude in November; the other is a Reuters story quoting a government official as saying New Delhi has not told refiners to stop buying Iranian crude. These two stories don’t just offer two different perspectives. They demonstrate exactly how confusing the situation is and how much more confusing it could become. And meanwhile, the truth remains out there.
Bloomberg’s sources from several of India’s largest refiners—and biggest Iranian crude buyers—may be telling the truth or they may be saying something that the United States wants to hear. If they are telling the truth, shipping data would support this soon enough: if they stop buying Iranian crude they will have to find a replacement for those 577,000 bpd that they had been importing from Iran as per Bloomberg shipping data.
There is no mention of alternative supplies in the story. What there is, however, is the caveat that it is basically too early to say if these refiners will import Iranian crude: final decisions are only due early next month. Put simply, these statements from refinery officials could be nothing more than much ado about nothing. Shipping data will tell.
Reuters’ story comes from a government official who has remained unnamed but who has made a point of telling the agency there has been no decision by New Delhi to halt imports. That shouldn’t be a surprise. An earlier statement from another government official had this to say: "We want to make the point that India is heavily reliant on oil imports for its consumption needs and 83 percent of its oil comes from external sources."
And here’s another statement from last week: Indian refiners may start paying for Iranian crude in rupees from November on as the sanctions kick in. Related: OPEC Secretly Discusses 500,000 Bpd Production Boost
On the one hand, we have some wary refinery officials, and on the other, we have several more optimistic government officials. Meanwhile, The Washington Times reported Monday that Iranian tankers have started turning off their trackers as they leave the Strait of Hormuz. Does this information even need explaining? What’s more, TankerTrackers reports that Iran’s fleet of very large crude carriers is large enough to export 1.85 million bpd.
To date, Iran exports around 2 million bpd, data from the Institute of International Finance revealed this week. Reuters cited the institution as saying this was down from 2.8 million bpd in April as importers took the cautious path. South Korea stopped buying Iranian crude in July and Japan earlier this month. India, too, reduced its intake of Iranian oil as it seeks to balance its ties with Tehran and its ties with Washington, both probably equally important for the nation.
So, the big question—will we see Indian imports of Iranian crude fall to zero—is likely to have an answer in the negative. It would be difficult for India to afford to alienate Iran as its oil consumption grows. Alienating Washington, on the other hand is less likely: Given China’s ambitious goals in the region, India is as important to the United States as the United States is to India.
By Irina Slav For Oilprice.com
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India will never kowtow to the United States or anybody else for that matter. It will look after its own national interests. Therefore, it will never halt its imports of Iranian crude no matter what pressure the United States puts on it. India announced that it doesn’t recognize any sanctions but UN sanctions and that it will ignore US sanctions on Iran and continue to import Iranian crude.
Moreover, Iran is not sitting idle either. It is reported to have offered India cargo insurance and tankers operated by Iranian companies as some Indian insurers have backed out of covering oil cargoes from Iran in the face of the returning U.S. sanctions on Tehran.
So my advice to authors of articles on the oilprice.com and other experts is to judge India by what it does and not by what it says.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London