NEW DELHI: The government on Thursday told oil refiners to look for alternative sources of crude oil supply from November, when the US’ oil industry sanctions on Iran are set to come into effect.
While India is yet to take a call on US’ demand to halt all Iranian crude imports, the Oil Ministry has asked refiners to be ready for a shortfall and make plans to increase supply from other sources like Saudi Arabia, Kuwait etc to make up for any shortage.
While India has said it recognises only United Nations sanctions, the warning to refiners has raised concerns that India might yield to US pressure.
Analysts say supply cut is a possibility, but bringing down Iranian imports to zero is not. Iran is currently the third largest supplier of crude to India, with volumes growing over the past few months despite sanction concerns.
However, with the US blocking European payment channels, buying crude from Iran will depend on Iran agreeing to other payment options like selling crude for rupees.
“It is all very uncertain now and outcomes will depend on how negotiations go forward — between India and the US, India and Iran, and finally India and other suppliers,” an industry source said.
Buying fuel in times of sanctions
During the previous round of sanctions on Iran, India was one of the few countries that continued to buy Iranian oil, although it had to reduce imports as shipping, insurance and banking channels were choked due to the European and US sanctions