Despite all the sanctions that the US is planning to impose on Iran, with intentions of blocking trade channels, India has is not going stop oil exporting from the Persian Gulf nation. State refiners Indian Oil Corp will import 6 million barrel and Mangalore Refinery and Petrochemicals will import 3 million barrels from the Persian state in November. As the dollar channels will be blocked in Iran with effects from 4th of November, Indian currency rupee is being considered as an alternative channel.
With all other sanctions that have already been imposed, USA is set to bring in oil-related sanctions from the first week of November. Sources claim that all the payment in the latest deal will be made in rupees. Indian banks, UCO Bank and IDBI Bank have reportedly been selected to make the payments, as they don’t have any exposure to US financial market.
During the first round of sanctions when EU joined the US in imposing financial restrictions, India initially used a Turkish bank to pay Iran for the oil it bought but beginning February 2013 paid nearly half of the oil import bill in rupees while keeping the remainder pending opening of payment routes. It began clearing the dues in 2015 when the restrictions were eased.
Iran is India’s third-largest oil supplier behind Iraq and Saudi Arabia. It was India’s second biggest supplier of crude oil after Saudi Arabia till 2010-11 but Western sanctions over its suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 million tonnes and 10.95 million tonnes respectively from it.
Sourcing from Iran increased to 12.7 million tonnes in 2015-16, giving it the sixth spot. In the following year, the Iranian supplies jumped to 27.2 million tonnes to catapult it to the third spot. Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of substitute crudes — Saudi Arabia, Kuwait, Iraq, Nigeria, and the US.
(With inputs from TOI)