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India hasn’t worked out yet a payment system for continued purchases of crude oil from Iran, Subhash Chandra Garg, economic affairs secretary at India’s finance ministry, said on Friday.
India’s Oil Minister Dharmendra Pradhan has conveyed the message that his country would continue to buy Iranian oil to some extent, Garg told CNBC TV18 news channel, as quoted by Reuters.
Recent reports have it that India has discussed ditching the U.S. dollar in its trading of oil with Russia, Venezuela, and Iran, instead settling the trade either in Indian rupees or under a barter agreement.
India is Iran’s second-largest single oil customer after China and was expected to cut back on Iranian oil purchases, but it is unlikely to cut off completely the cheap Iranian oil that is suitable for its refineries.
India wants to keep importing oil from Iran, because Tehran offers some discounts and incentives for Indian buyers at a time when the Indian government is struggling with higher oil prices and a weakening local currency that additionally weighs on its oil import bill.
But the United States continues to insist that it expects Iranian oil buyers to bring their purchases down to zero.
Earlier this week, Indian officials said that they hoped India could secure a waiver from the United States, because it has significantly reduced purchases of Iranian oil. Late last week, the United States hinted that it was at least considering waivers.
Meanwhile, Special Representative for Iran Brian Hook is currently touring India and Europe to discuss U.S. foreign policy toward Iran, the U.S. Department of State said on Thursday.
Special Representative Hook and Assistant Secretary of State for Energy Resources Francis R. Fannon are will be meeting with Indian government counterparts for consultations.
“During this trip, Special Representative Hook will engage our allies and partners on our shared need to counter the entirety of the Iranian regime’s destructive behavior in the Middle East, and in their own neighborhoods,” the State Department said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
Moreover, India has already made it clear that it doesn’t recognize any sanctions except United Nations sanctions meaning that it will not comply with US sanctions on Iran.
India wants to keep importing oil from Iran, because Tehran offers some discounts and incentives for Indian buyers at a time when the Indian government is struggling with higher oil prices and a weakening local currency that additionally weighs on its oil import bill.#
The appreciating US dollar against the rupee is making India’s crude oil imports costlier thus straining the country’s finances.
India is reported to be thinking about ditching the US dollar in its trading of oil with Russia, Venezuela, and Iran.
There are many ways for India to bypass the US dollar and also reduce the cost of its crude oil imports. It can pay for its oil imports from Iran, Russia and Venezuela by barter trade agreements and currency swap agreements or by using the petro-yuan.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London