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India can probably do without importing Iranian crude oil, the chairman of a Switzerland-based think tank told Times of India on Tuesday, but warned that the trade wars and tariffs are more worrisome for India’s economy.
India—the world’s third-largest oil importer and the second-biggest oil customer of Iran—is unlikely to see a long-term impact on its oil import bill from the U.S. sanctions on Iran’s oil coming into force in less than two weeks, Frank-Jürgen Richter, chairman of independent think tank Horasis, told the Times of India.
More worrying for India’s economy than the sanctions on Iran is the trade war and trade tariffs, although they are mostly aimed at China, Richter said. However, should trade wars lead to a global recession, India would be relatively isolated because its economy is not that integrated with the global economy as is China’s, he noted.
India 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.
Recent reports have it that India is also discussing 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.
But the United States continues to insist that it expects Iranian oil buyers to bring their purchases down to zero.
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Indian conglomerate Reliance Industries has already stopped importing crude oil from Iran to comply with U.S. sanctions because of its large exposure to international markets and the U.S. financial system.
Earlier this month, Indian officials said that they hoped India could secure a waiver from the United States, because it has significantly reduced purchases of Iranian oil.
The United States has recently hinted that it was at least considering waivers, but U.S. Treasury Secretary Steven Mnuchin said over the weekend that it would be more difficult for Iranian oil customers to get waivers from the sanctions than it was during the Obama administration, and the U.S. would issue waivers, if any, only to buyers that have significantly reduced Iranian purchases.
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.