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The United States is working with oil producers like Saudi Arabia and the United Arab Emirates (UAE) to ensure India has enough crude supply after the end of all sanction waivers for Iranian buyers, but the U.S. can’t ensure its own oil will be sold to India at preferential prices, American officials said on Monday.
The U.S. is working with its allies in OPEC—Saudi Arabia and the UAE—to make sure that India has sufficient supplies after the American sanction waivers expired last week, according to the U.S. Ambassador to India, Kenneth Juster, as quoted by Indian media today.
India has been Iran’s second-largest oil customer after China and has been buying Iranian oil at discount rates as Iran was offering very attractive terms to Indian buyers, including almost free shipping and an extended credit period for payment.
India’s oil imports from Iran increased by some 5 percent between March 2018 and March 2019 compared to the previous fiscal year through March 2018, because Indian refiners rushed to buy Iranian oil before the U.S. sanctions kicked in in November and hurried to wind up purchases ahead of the waiver’s end last week.
According to Indian outlet NDTV, Iran supplied more than one tenth of India’s crude oil demand in the fiscal year ended March 2019.
The end of the U.S. sanction waivers will hit India hard because it has to pay more for alternate oil supplies at a time when the country is in the middle of elections and higher gasoline and diesel prices will not sit well with any voter.
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Last week, reports emerged that India had asked the United States if it would be flexible in allowing it to continue importing Iranian oil despite the end of the sanction waivers.
While the U.S. is working with the Saudis and emirates to ensure Indian supply, America can’t guarantee attractive discount prices to Indian buyers, U.S. Secretary of Commerce Wilbur Ross said in New Delhi on Monday.
Asked if the U.S. would consider selling its crude to India at discount rates to offset the expected shortfall in Iranian supply, Ross said, as carried by Reuters: “Oil is owned by private people so the government cannot force people to make concessionary prices.”
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.