How does India plan to buy Iranian Oil and also evade US Sanctions? India has flagged to keep buying Iranian oil by using Iranian ships and insurance cover after the Trump administration’s second batch of sanctions against Tehran kicks in on November 4. This move has come ahead of the 2 + 2 dialogue with the US.
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The decision points at New Delhi’s attempt to drive a hard deal to keep purchasing some Iranian oil and the planned $6 billion missile deal with Russia on track. US defence secretary Jim Mattis and secretary of state Michael Pompeo are scheduled for a meeting with their Indian counterparts Nirmala Sitharaman and Sushma Swaraj on Thursday.
India will draw comfort from China’s decision last month to shift oil shipments from Iran to vessels owned and registered by Tehran.
Indian Media had on July 27 reported Tehran underwriting shipping risks for Indian state-run refiners to maintain its position as India’s second largest oil supplier. The Iranian move to underwrite risks, a throwback to the days of sanctions imposed by the Barack Obama administration, cover ships ferrying Iranian crude and their cargo.
There are other factors India can leverage during the discussion. One is Beijing’s decision to keep US oil as a bargaining chip in its trade war with Washington. It has stopped buying US crude and left the threat of disciplinary duty hanging, leaving India as the only Asian buyer with enough desire to pick up the slack left by China. The other factor is China’s decision to use Iranian containers, which will keep Iranian oil flowing into the market since Beijing is its biggest customer.
This opens the possibility for India to find a sweet spot with the Trump administration by agreeing to a decline in oil imports from Iran and promising to raise shipments from the US, which state refiners are looking to do anyway. The decrease in Iranian imports too are unlikely to damage much – at least in terms of supply — since most refiners have lifted the bulk of the annual contract.