NEW DELHI: Ahead of the high-level ‘two-plus-two’ dialogue with the US, India has signalled its intention to keep buying Iranian oil by using Iranian vessels and insurance cover after the Trump administration’s second batch of sanctions against Tehran kicks in on November 4.
The decision indicates New Delhi’s attempt to drive a hard bargain to keep some Iranian oil flowing and the planned $6 billion missile deal with Russia on track. US defence secretary Jim Mattis and secretary of state Michael Pompeo are scheduled to hold talks with their Indian counterparts Nirmala Sitharaman and Sushma Swaraj on Thursday.
India will draw comfort from China’s decision last month to shift oil shipments from Iran to vessels owned and insured by Tehran.
TOI had on July 27 reported Tehran underwriting shipping risks for Indian state-run refiners to retain its position as India’s secondlargest oil supplier. The Iranian move to underwrite risks, a throwback to the days of sanctions imposed by the Barack Obama administration, cover ships ferrying Iranian crude and their cargo.
There are other factors India can leverage during the talks. One is Beijing’s decision to keep US oil as a bargaining chip in its trade war with Washington. It has stopped buying US crude and left the threat of punitive duty hanging. This leaves India as the only Asian buyer with enough appetite to pick up the slack left by China. The other factor is China’s decision to use Iranian vessels, which will keep Iranian oil flowing into the market since Beijing is its biggest customer.
This opens the possibility for India to find a sweet spot with the Trump administration by agreeing to a reduction in oil imports from Iran and promising to raise shipments from the US, which state refiners are looking to do anyway. The reduction in Iranian imports too are unlikely to hurt much — in terms of supply at least — since most refiners have lifted the bulk of the annual contract.