Will do our best to ensure oil supply to India: Iran

Eshaq Jahangiri

Iranian vice president Eshaq Jahangiri acknowledged on Tuesday that United States sanctions would hurt the economy but promised to "sell as much oil as we can" and protect its banking system.

President Donald Trump said in May he would pull the United States out of an global nuclear deal with Iran and reimpose USA sanctions.

"We are determined to convince the Iranian leadership that this malign behavior won't be rewarded and that the economic situation in the country will not be permitted to be rectified until such time that they become a more normal nation", he said.

"Trump administration will push for zero crude, condensate and products exports from Iran", said Sri Paravaikkarasu, Head of East of Suez Oil at energy consultancy FGE.

Listing the "privileges", he said that in the previous round of sanctions "Iran did its best to ensure security of oil supply to India and offered flexibility through selling oil with longer term credits and discounted prices as well as oil payments in rupee, and insurance coverage for oil shipments which facilitated our bilateral trade and pushed up significantly Indian export to Iran".

India, Iran's top oil client after China, has asked refiners to look for alternative oil as the nation may have to drastically cut imports from Tehran to comply with the renewed U.S. sanctions.

"... If India were to replace Iran with countries like Saudi Arabia, Russia, Iraq, the U.S. and others for the 10 per cent of its oil demand then it may have to revert to dollar-denominated imports which mean higher CAD (Current Account Deficit) and deprivation of all other privileges Iran has offered to India", Rahaghi said. The current payment mechanism involves Indian refiners transferring funds to SBI when they use Germany-based Europaeisch-Iranische Handelsbank to pay euros to Iran.

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"We think the Europeans will act in a way to meet the Iranian demands, but we should wait and see", Jahangiri said.

It began clearing the dues in 2015 when the restrictions were eased.

Back in 2012, European Union put restrictions on insurance of Iranian oil and ships carrying them.

Iran is India's third-largest oil supplier after Iraq and Saudi Arabia.

Iran supplied 18.4 million tonnes of crude oil during April 2017 and January 2018 (first 10 months of 2017-18 fiscal).

State refiners, accounting for about 60 percent of India's almost 5 million bpd of refining capacity, lifted 10 percent more Iranian volumes in June compared to May, at about 454,000 bpd, the data from the sources showed. This is 30 days more than other oil-producing countries.

Following Trump's announcement, companies are not allowed to strike new deals in the Iranian oil and energy sector. In November, deals involving Iran's oil and energy sector, shipping and ports, and insurance services will be prohibited.

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