India-Iran trade relations flourished emphatically in 2018. Between April and June of 2018, Iran remained the second largest exporter of oil to Indian state refineries. This was confirmed by the Indian minister of petroleum and natural gas. Iran replaced Saudi Arabia to take the second spot in the list of biggest oil exporters to India, mainly due to steep discounts and credit offered by Iran.
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The Indian oil companies, as reported by EurAsian Times, were largely attracted by the advantages provided by Tehran over other oil exporting nations. Iran offered almost free shipping to India and also gave India an extension in the credit periods on oil sales. These leverages pushed Iran to the second spot on the list of biggest oil exporters to India and replacing Saudi Arabia.
In the first three months of the current fiscal year, India imported 457,000 barrels of oil from Iran per day. India is the second largest importer of Iranian oil after China which is Iran’s premier client. As reported by Reuters, India, during the same tenure last year imported 279,000 barrels per day. Clearly, India’s imports of oil from Iran have almost doubled in 2018 as compared to 2017.
While Iran was the second largest exporter of oil to India, Iraq remained the largest. Between April and June, India imported 7.27 million tonnes of oil from Iraq. India’s oil imports from Saudi Arabia in the same period stood at 5.22 million tonnes hence making it the third largest exporter of oil to India after Iran.
Can These Healthy Trade Relations Survive Amid US Sanctions?
The US after pulling back from the Iran Nuclear Deal is now pressing sanctions on Iran to isolate the country. The US has said that it will reduce Iran’s oil sales to almost zero and has asked other nations to cease oil imports from Iran.
India will now have to choose between the US and Iran and this would be a tough choice by all means. The US has made it very clear that any nation which continues to import oil from Iran will face the same sanctions as Iran does.