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Senior Official: India “Definitely” Not Going To Zero Iranian Oil Imports

India will “definitely” not cut off entirely its crude oil imports from Iran, but it expects to have more clarity on its oil purchasing strategy amid the U.S. sanctions on Tehran at a meeting with top U.S. officials next week, a senior Indian government official with direct knowledge of the country’s oil purchasing policy told Reuters on Wednesday.

“Definitely we are not going to zero,” the Indian official told Reuters, noting that the September 6 meeting between U.S. Secretary of State Mike Pompeo and Defense Secretary Jim Mattis with India’s Foreign Minister Sushma Swaraj and Defense Minister Nirmala Sitharaman will give more clarity on India’s oil purchases from Iran as this would be “the highest level of meeting we will have with the U.S.”

Analysts have been largely expecting India to scale back some of its Iranian oil imports, but not to go completely cold turkey. India—Iran’s second largest oil customer after China—has been torn between trying not to have its sovereign and its refiners cut off from the U.S. financial system, if it were to continue importing Iranian oil, and keeping cheaper Iranian oil imports flowing.

Iran, for its part, is trying to keep its key buyers in Asia, especially its biggest customers China and India, purchasing Iranian oil even after U.S. sanctions on Tehran oil exports snap back in early November.

Related: South Korea Doubles Down On Gas And Renewables

Iran has reportedly started to offer 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.

India’s imports from Iran were expected to start slowing down from this month and next as some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, prompting them to reduce oil purchases from Tehran.

Between August 1 and 16, total Iranian oil exports plunged by 600,000 bpd compared to July loadings, due to plummeting flows to India, Platts preliminary tanker tracking data showed. India saw crude flows from Iran plunge to 203,938 bpd in the period August 1-16, compared to 706,452 bpd in July, according to Platts trade flow data.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh G Salameh on August 30 2018 said:
    India is the world’s third-largest economy after China and the United States based on purchasing power parity (PPP). It is also the world’s third-largest crude oil importer. It is Iran’s second biggest customer accounting for 33% of Iranian crude oil exports.

    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. In June 2018 India imported 705,000 b/d of Iranian crude compared with 464,000 b/d in June 2017. This is not the action of a country planning to comply with US sanctions on Iran.

    What India may do is a bit of semantics to its oil purchases from Iran coupled with a few soothing words for the Americans which in the final analysis amount to no reduction whatsoever from its oil imports from Iran.

    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 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
  • George Chandy on August 30 2018 said:
    Both India and Iran will be better off if they can negotiate to trade oil in Indian Rupees. This will make the Indian Rupee more stronger.

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