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Phunchok Stobdan who formerly served as Indian Ambassador Extraordinary and Plenipotentiary to the Republic of Kyrgyzstan, in an exclusive interview with the Islamic Republic News Agency (IRNA) commented on India’s possible reaction to the US demand to reduce its oil imports from Iran to zero.
“There is little doubt that India is facing a real pressure from the US on buying oil from Iran, despite its best attempt at getting a waiver. The US has recently stepped up pressure on all countries, including India and China, to completely stop buying oil from Iran from November 4,' he added.
“The US officials have said that they will aggressively enforce these provisions to lock up Iran's assets overseas and deny Iran's access to its hard currency. For India, there are many options available, but bringing down its imports from Iran to zero, as desired by the US, is not possible. However, India most likely is going to opt for economics than politics for its oil imports,” he noted.
He went on to note that “the US officials have said the Indian and Chinese companies would be subject to the same sanctions as those on the other countries. Given their huge energy needs, India and China are the major importers of Iranian oil and the US sanctions have put India in a quandary.”
Elaborating on the effects of the global political scenario on India, the veteran diplomat said: “Re-imposing the US sanctions on Iran shows that India is affected by the dynamics in global political scenario, and economic sanctions regime is leaving an adverse impact on the demand-supply situation. The US has said that it is prepared to work with nations that are reducing their oil imports from Iran on a 'case-by-case basis', but will not grant waivers to countries like India and Turkey as it could substantially reduce the pressure on the sanctions-hit Tehran.”
“Iran is India's third largest oil supplier behind Iraq and Saudi Arabia. India imported 18.4 million tonnes of crude oil from Iran during April 2017 and January 2018,” the former Ambassador noted.
Explaining India’s general stance on the sanctions, the seasoned analyst of the world affairs said: “India's position has generally been that it will only enforce sanctions authorized by the UN Security Council resolutions. But the US is compelling India to comply with its re-imposed sanctions on Iran. Already, the Oil ministry has asked refiners to prepare for a 'drastic reduction or zero' imports of the Iranian oil as of November.”
“However, the situation is still evolving. In the past, India was one of the few countries that continued to buy Iranian oil, although imports had to be reduced due to shipping, insurance and banking channels were choked by the European and US sanctions.”
He went on to note that the situation now quite different from the past, and said: “This time the situation is different. Recently, the US Ambassador to the United Nations Nikki Haley told the Indian Prime Minister Narendra Modi to lessen India’s dependence on the Iranian oil. Under pressure from the US sanctions, Reliance Industries Ltd, the operator of the world's biggest refining complex, has decided to halt imports. Nayara Energy, an Indian company promoted by Russian oil major Rosneft, is also preparing to halt Iranian oil imports from November after a communication from the government. The top three Indian buyers of Iranian oil, Indian Oil Corp, Mangalore Refineries and Petrochemicals Ltd and Nayara Energy would also stop importing from Iran.”
However, elaborating on India’s options to meet its energy needs, Ambassador Phunchok Stobdan said: “India’s options to find alternative sources have widened after the OPEC agreed with Russia and other oil-producing allies last week to raise output from July by about one million bpd, with the Saudi Arabia too pledging a 'measurable' supply boost of 11 million barrels of oil per day (bpd) in July.
On the possible ways for India to continue oil imports from Iran, he said: “Most likely, India will have to give up the Euro payment mechanism for the Iranian crude imports from November. But, it can still continue importing if Iran accepts an alternative payment or offers a longer credit period.”
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