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Iran will take care to supply India with all the oil it needs, the country’s embassy in India said, a day after deputy ambassador threatened India that Iran could turn the tap off if India cut back on Iranian oil under the pressure of U.S. sanctions.
Yesterday, deputy Iranian ambassador Massoud Rezvanian Rahaghi said, speaking at an event in New Delhi, that India would lose its “special privileges” if it suspends Iranian oil purchases in November when the sanctions take effect.
The threat—which the embassy says was actually a misquote—came on the same day as reports that Iranian crude oil imports into India fell by 15.9 percent in June from May, or to 592,800 bpd from more than 705,000 bpd in the previous month. The drop suggests that despite its initially tough stance on U.S. sanctions, Indian refiners have started changing their mind as the November 4 deadline to wind down business relations with Iran draws nearer.
Now, the embassy’s official statement said Iran understands the difficulties India faces while navigating a volatile energy market and noted Iran has been a reliable energy supplier to the world’s fourth-largest importer of crude. Further, the statement said Iran will make sure to offer India flexible measures to facilitate bilateral trade and particularly Indian exports to Iran, the New Indian Express reports.
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This might very well suggest that Iran has barter plans for India as it has for other oil buyers as a means of bypassing sanctions. India imports more than 80 percent of the oil it needs. The average daily rate for 2017 was 4.4 million bpd—a record high. In such a context, it’s no wonder that Iran would make an extra effort to secure India as a stable trade partner and oil buyer.
The United States last month urged India and all other Iranian crude buyers to reduce their purchases from the country to zero by November 4 or be held in violation of sanctions. Since then, the State Department has somewhat softened its stance, suggesting there maybe space for negotiations on waivers with “a handful of countries.”
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.
Iran already has barter trade agreements with Russia, India and Turkey to facilitate bilateral trade and bypass US sanctions.
In the face of overwhelming rejection of US sanctions against Iran even by the US close allies, the US State Department hinted at the possibility of granting waivers for some countries to continue importing crude oil from Iran.
The back-peddling by the State Department is mainly prompted by President Trump’s worry that rising oil prices will offset the benefits from his tax cuts and thus cost his republican party the midterm elections of the US senate and the US House of Representatives in November this year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Barter is no protection in this case: the US can target arbitrarily some or all of the companies that do barter with Iran and even Indian government. Though it is harder to establish the transactions taking place in the case of barter, it doesn't mean it will be a real obstacle: the US is more than capable to establish the fact of barter taking place and doesn't need to establish each and every deal in order to try to slap on punishing sanctions on India for that. Not a fundamental problem nowadays.
To me it means that if India decides to continue their oil trade with Iran that means only one thing: they aren't too much afraid of American retaliation (for lack of better replacement termfor economic bullying) anymore: either because they have pretty weighty countermeasures, or because they are relatively immune to the US tools (especially their banking system, because that's finally the magic wand the US uses to twist the arms of anybody in the world, including their allies and friends, to act as they want them to act)