Published: Sun, September 23, 2018
Markets | By Otis Pena

India looks to counter USA curbs on Iran oil import

India looks to counter USA curbs on Iran oil import

"From the point of view of stable petroleum supplies, we are still hoping to ask the government to negotiate tenaciously with the United States government to achieve an exemption for Japan from its sanctions against Iran", Tsukioka said. The EU has promised to protect its business interests against the impact of United States sanctions against Iran.

India's Chennai Petroleum will also stop processing Iranian crude oil from October to keep its insurance coverage once new sanctions by the sanctions go into effect, three sources familiar with the issue said.

Less than 50 days after the second batch of U.S. sanctions against Iran came into effect, Iran's oil exports have dropped substantially, causing "severe economic damage" to Iran, Bloomberg reports.

India, Iran's leading oil client after China, is also developing the Chabahar Port in the Middle Eastern nation. Some sanctions took effect on August 6, while those affecting the oil and banking sectors will start from November 4.

The Iranian government's response includes a plan that hadn out electronic vouchers to about ten million underprivileged Iranians to be used for "fair distribution" of rationed essential goods at subsidised prices.

In May, US President Donald Trump withdrew from a 2015 nuclear accord with Iran and ordered the renewal of US sanctions.

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India, Iran and Afghanistan held a ceremony in May 2016 to herald the start of work on the port based on an Indian pledge of $500 million investment in it, with Iran to provide the remaining $500 million.

The EU has been discussing with India that it was in the process of coming out with a payment solution as using U.S. dollars for oil purchase will be restrained post-November 4 when the United States sanctions come into force.

Chennai Petroleum, a subsidiary of the country's biggest refiner Indian Oil Corp (IOC), has a deal to buy up to 2 million tonnes, or 40,000 bpd, of oil from Iran in the fiscal year 2018/19.

The surge in Iran exports during May, June and July cut Japan's January-July decrease in Iranian oil imports to just 1% year on year, compared with a cumulative 13% drop over January-April.

The United States has demanded that nations cut all their Iranian oil imports when sanctions on the country's petroleum sector over Tehran's nuclear program are re-imposed on November 4.

Besides blocking of banking channels from November, the absence of payment mechanism may pose a challenge to the transportation of the oil as Iranian crude is bought on a CIF basis and shipped on Iranian tankers.

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