By Prarthana Mitra
The US will reportedly grant India a waiver from the oil sanctions it plans to reimpose on Iran starting November 4. Still awaiting official announcement from Washington, this waiver will allow Indian oil companies to import 1.25 million tonnes of oil every month from Tehran, at least till March.
The reimposition of the sanctions, first hinted at earlier this summer, is summarily intended to choke Iran’s biggest source of revenue in order to turn up the pressure on Tehran, until it agrees to renegotiate a new nuclear deal. The US had also threatened to ostracise any country that trades with Iran without their consent after the sanctions are implemented.
From a zero-tolerance policy, the Trump administration has acquiesced to issue waivers to specific countries to continue accepting limited imports from Iran. After months of bilateral engagement over the matter, sources familiar to the matter told Economic Times
on Thursday, “India and the US have broadly agreed on a waiver. India will cut import by a third, which is a significant cut.”
Negotiations beget further negotiations
Having imported about 22 million tonnes of crude oil from Iran in 2017-18, Indian oil companies were planning to raise that to about 30 million tonnes in the coming year. But they have unanimously agreed to respect the conditions of the waiver and will now import 1.25 million tonnes a month till March 2019, according to the source.
Specifics of the distribution among different oil firms have not been arrived at yet but the waiver brings massive relief to everyone including Indian Oil and MRPL, the two largest Iranian oil consumers.
India and Iran are yet to figure out shipping and insurance details to ensure a seamless trade. Following the first round of sanctions, Iran was compelled and continues to provide tankers and ensure their oil cargoes, as international shippers and insurers stopped extending their services for Iranian oil imports.
Also up for debate is the mode of payment as it is likely that both countries will keep the existing mechanism which allows 55% of the payment to Iran in euro and the rest is made in INR through UCO Bank. According to diplomats pleading India’s case for the waiver, this payment mechanism ensures that Iran can’t use India’s oil money payment for sponsoring terrorism, which is a key concern for the White House.
India also reportedly expressed
a wish to import more American oil during the negotiations, provided it comes at a competitive price. The country’s oil firms, however, have always preferred Iranian oil because it is cheaper and compatible with the configurations of our main refineries.
Prarthana Mitra is a staff writer at Qrius.
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