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India will continue importing Iranian crude despite U.S. sanctions, India’s Foreign Minister Sushma Swaraj said ahead of a meeting with her Iranian counterpart Mohammad Javad Zarif. Swaraj said, as quoted by Radio Free Europe, that India only honors sanctions imposed by the United Nations, but not ones introduced by individual countries.
India is the biggest buyer of Iranian crude. The last time the United States imposed sanctions on the country, New Delhi continued to trade with it, but when UN sanctions were introduced, it cut back on oil shipments because of the problems it would create for its banking and tanker transport industries.
Last month, India imported an average 640,000 bpd of Iranian crude, the highest since October 2016 and up by 49 percent from March. The amount was also 20 percent higher than in April 2017, which was attributed to major shipping discounts that Iran agreed to grant India.
Crude oil is among the biggest export goods that Iran sends to India, but it also has other interests in it, chief among them the construction of the Chabahar port in the Gulf of Oman. The port is of strategic importance to India, which wants to use it as part of a new maritime route that goes around its neighbor and rival, Pakistan.
There is also speculation that India could decide to settle its Iranian crude oil imports in national currencies to limit the risk of getting penalized by Washington, as small as the chance for this may be, what with New Delhi being a valuable ally in Asia.
Trade settlement in national currencies is something that Iran is eager to adopt in its international trade with a view of minimizing the participation of U.S. dollars in its financial system. China, another major buyer of Iranian crude that has said it will ignore U.S. sanctions, may also decide to start using its national currency to pay for the crude.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.