Azerbaijan, Baku, Feb. 23 /Trend S.Isayev/
If India feels more pressure from the U.S., and Europe, it will further reduce its oil import from Iran, U.S. Northeastern University Professor Kamran Dadkhah said.
"India has taken measures to reduce its oil imports from Iran," he told Trend, commenting on recent news about India cutting down oil imports from Iran.
India is Iran's second-biggest market after China and the Islamic Republic provides about 12 percent or about 370,000 bpd of the Asian economy's oil needs. Right now, India is pushing refiners to reduce oil imports from Iran by at least 10 percent for 2012/13.
India has said it will only abide by United Nations sanctions, and said other sanctions do not apply to it. It had said it would not seek a waiver from Washington to fresh U.S. sanctions calling for importers of Iranian oil to make substantial cuts.
However, the country struggled to find ways to pay Iran after the United States made dollar transactions almost impossible under financial sanctions. Refiners have used Turkey's Halkbank for payments in euros since the middle of 2011, but are unsure how long that route will last given tougher EU sanctions.
"Since rupee is not an international currency, Iran will be forced to buy Indian goods even low quality products on Indian conditions and prices," Dadkhah stressed. "India will also negotiate down the price of Iranian oil and subtract the fees necessary to bypass sanctions in order to transfer money."
Dadkhah said that India will benefit from the sanctions imposed on Iran, agreeing that sanctions always hurt the sanctioned country, as well as the sanctioning parties while benefiting everyone else.
"In 2010 Iran exported about $13 billion worth of goods, mostly petroleum, to India while importing only $2.3 billion. Most likely in 2011 India's trade deficit with Iran grew and it may grow this year as well," he said. "India will take the following actions."
India imports about $11 billion of crude a year from Iran while its exports are just short of $3 billion. In 2011/12, crude imports will be lower than the previous fiscal year's 370,000 bpd due to payment problems triggered when India's central bank scrapped a long-standing clearing house mechanism in December 2010 under U.S. pressure.
Speaking about India looking for other oil exporters to get oil from, Dadkhah underscored that in one way or another, India will have to look for other sources of energy.
"Saudi Arabia has signaled its willingness to fill the gap. Given the amount of the Indian economy and its ambition to become a world economic power, diversity of its sources of energy is a must," he explained.