India is struggling for a stable crude supply alternative as the exemptions to US Sanctions ended on May 2. An HT report said that New Delhi may not resume the crude oil dealings with Tehran anytime soon. The report also said that Delhi has not been able to find any alternative to the Iranian crude oil. This means a glut in domestic markets, which will directly impact the businesses and industrial output. There are reports that India is likely to raise the huge economic losses with United States Secretary of State Mike Pompeo later this month.
The meeting gains significance as the outcome will have far-reaching effect. Earlier, Iranian Foreign Minister Javed Zarif had visited India in May. At that time, then Minister of External Affairs Sushma Swaraj had said that, “a decision will be taken after the elections keeping in mind our commercial considerations, energy security and economic interests.”
At that time, the Modi government had said that policy of importing oil from other countries will be based on the three factors. If it fits into these three factors, then a decision on importing oil will be taken.
While the bilateral ties between the two Asian nations are just fine, the US Sanctions and the ongoing tension in Gulf region may have some bearing on the crucial relationship.
Before the US Sanctions came into effect, Iran was India’s third-largest oil supplier after Iraq and Saudi Arabia. Iran supplied 18.4 million tonnes of crude oil between April 2017 and January 2018 (first 10 months of fiscal 2017-18.
The US had told India and other countries to cut oil imports from the Gulf nation to "zero" by November 4 or face sanctions. However, Washington had granted a six-month waiver from sanctions to eight countries, including India. India, which is the second biggest purchaser of Iranian oil after China, had agreed to restrict its monthly purchase to 1.25 million tonne or 15 million tonne in a year (300,000 barrels per day), down from 22.6 million tonne (452,000 barrels per day) bought in the 2017-18 financial year.