India has clarified reports saying that it will be looking at the economics of the country, and not the politics, of importing the crude oil from the United States, while this import should not be seen as a replacement for Iranian vessels, said the Indian media.
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India’s Business Line reports, a senior Indian government official was quoted saying that Indian imports of American oil should not be seen as a replacement for Iranian containers.
According to Oil Price, US Secretary of State Mike Pompeo has said that the US would consider waivers “where appropriate”, but reiterated that the country expects to have Iranian oil exports to “zero”.
“We have told the Indians consistently, as we have told every nation, that on November 4 the sanctions with respect to Iranian crude oil will be enforced, and that we will consider waivers where appropriate, but that it is our expectation that the purchases of Iranian crude oil will go to zero from every country, or sanctions will be imposed,” Pompeo said, noting that several nations would need “a little bit of time to unwind”.
India is Iran’s second-largest single oil customer and will probably cut back on Iranian oil purchases, but is unlikely to cut off entirely the economic Iranian oil that is suitable for its refineries.
Over the past few months, surging oil prices and the weakening Indian currency have already created a perfect storm for India, where oil demand growth has been rising, but the higher oil prices are increasing the country’s expenditure on crude oil imports, which account for 80 per cent of Indian oil consumption.
The senior government official here confirmed that the US-India summit last week discussed India scaling up American oil imports as part of US measures to cut its trade shortfall.
“But we are clear that these are commercial decisions—dependent on how competitively oil is priced and on the requirements of our refineries,” said the official.
“We are dealing with two issues separately and our stand has been communicated to the US,” added the official on being questioned to whether higher American oil imports could mean replacing Iranian crude.
As per the analysts, some of the US grades would be fit for Indian refiners, but they will have to battle commercially with crudes with shorter travel times, so US oil could serve as spot purchases for Indian companies when the arbitrage works.