India-US to hold talks on sanctions against Iran oil imports

The US has told India and other countries to cut oil imports from Iran to “zero” by November 4 or face sanctions, indicating that there would be no waivers to anyone.

A team of US officials is expected to visit India soon to hold discussions on the sanctions against Iran and its impact on the country’s oil imports, persons familiar with the development said.

This file photo taken on March 12, 2017 shows a view of an oil facility in the Khark Island, on the shore of the Gulf. The United States remains determined to force Iran to change its behaviour by cutting its oil exports to zero, the State Department said on July 2, 2018.(AFP)

At the same time, India is examining various options, such as stepping up the rupee-rial arrangement for importing oil from Iran, as the US has been putting pressure on New Delhi in relation to its ties with Iran, a source said.

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“In the next few weeks, we expect to have some engagements on the issue with the US. We cannot pre-judge what the US will be doing. We would have greater clarity on the issue after that,” said a source.

The source said there is ‘informal’ indication that the US might see India’s investment in the Chabahar port as a ‘carve out’ because of Afghanistan. Ports and shipping also come under US sanctions on Tehran that follow president Donald Trump’s May pullout from the Iran nuclear deal that was midwifed by the Obama administration in 2015.

The Chabahar port gives land-locked Afghanistan sea access and would reduce its dependence on Pakistan.

Iran is 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).

“Iran is an important partner for us and a major source of our oil import. We would soon have more clarity on the issues related to US sanctions that are expected to kick in both in August in November,” said a source.

“We hope that they understand our reasoning on Chabahar. It (the US sanctions) should be carved out in the context of Afghanistan,” said the source.

The US has told India and other countries to cut oil imports from Iran to “zero” by November 4 or face sanctions, indicating that there would be no waivers to anyone. But subsequently, US officials said that they would look at relaxation to ‘friends and allies’ who would slash the oil import from Iran in the next few months.

“We understand from certain statements that the US is prepared to work with countries that are reducing their oil imports on a case-to-case basis”, said the source.

The source said there was no doubt that the US was going to put pressure on India and other countries which import oil from Iran’

“The question is what do we see as a national interest and how do we explain our case to the US. That is still to be done.”

The rupee-rial that arrangement was used as a major payment mechanism to buy oil from Iran before sanctions were lifted against it three years ago. Though the mechanism is still active, its importance has come down. Under the mechanism, India used to pay in euros to clear 55 per cent of its dues through Ankara-based Halk bank. The remaining 45 per cent payment was remitted in rupees in accounts Iranian oil companies had with the Uco Bank.

Last week during her visit here, US envoy to the United Nations N Nikki Haley had said that India should snap trade ties with Iran.