State Bank of India, the country’s largest bank, has said it is giving up transactions for Iranian oil
India is preparing Plan B for its oil consumption after the United States administration under President Donald Trump declared zero tolerance against any country or entity that flouts its diktat to stop buying crude from Iran after November 4 and when the 180-day wind-down period ends, reports The Times of India.
Private sector refiners Reliance Industries and Nayara, owned by Russia’s Rosneft, have already been winding down Iranian imports.
State Bank of India, the country’s largest bank, has said it is giving up transactions for Iranian oil. Next in line could be insurers, who may refuse cover to vessels carrying Iranian oil or units that process that oil.
Can India survive without Iranian oil?
related news
India is bracing a life without Iranian oil and this sentiment was indicated when oil minister Dharmendra Pradhan on Thursday said the government will go by “national interests”.
Exuding confidence, he also said, “In fact, there is not a single oil-producing country from where we don't buy crude today. So, there is no threat of supply disruptions because of the latest threat of US sanctions.”
And the oil minister is right when he said that India has alternatives as Iraq, Saudi Arabia and Kuwait can fill the gap. However, there will be some incremental increase in costs as they may not give the kind of economic sweeteners on freight and insurance that Iran offers. Iran is India’s third-largest oil supplier.
Challenges for India without oil from Iran
Finding alternatives for Iranian oil wouldn’t be as much a challenge as balancing its age-old relations with Tehran and the financial/strategic stake in the Chabahar port project with the imperative of avoiding US clampdown.
Unlike sanctions under Barack Obama’s presidency, when India had secured a waiver, Trump’s Washington is totally unforgiving. This time, even China – the single-largest buyer of Iranian crude – too may not keep India company as it is trumped by USD 150-200 billion tariff war.
New Delhi may, thus, find it difficult to even operate through the rupee payment mechanism like it had done in the past. Unsure of how things will pan out, the oil ministry on Thursday told state-run refiners to ready alternative sources.
Be ready
“It is not like a final decision has been taken. But as a business proposition, you don’t expect refineries to wait till the last day before seeking alternative supplies. There are quantities to be contracted, logistics to be tied up, refinery feed tweaked. These take time,” one executive of a refining company said.