India hardly to stop importing oil from Iran

Azerbaijan, Baku, Feb. 3 /Trend, T.Jafarov /

Iran is India's second biggest crude supplier and India will hardly be able to stop importing oil from Iran for a long time, Head of Energy Security & Geopolitics, Energy Studies Institute of the National University of Singapore, told Trend by telephone from Singapore.

India tried to find other sources of oil supply and some Indian oil companies stopped oil trading with Iran.

Although Tehran and Delhi failed to solve oil payment, India will have to continue importing crude from Iran in long-term, he said.

India said Wednesday it is yet to resolve a crude oil payment problem with Iran after the South Asian nation's central bank halted payments through a financial clearing house, reported AFP.

An oil trading dispute between India and Iran escalated as Tehran refused to sell oil to India under New Delhi's prohibitive new rules, sources on both sides said on Wednesday.

The Indian sources said officials from the central banks of the two countries will meet on Friday as Iran seeks to rescue trade worth around $12 billion a year, which could be jeopardized by rising U.S. pressure on countries trading with Iran to abandon all dealings.

In December, India's central bank said payments to Iran could no longer be settled through a long-standing Asia clearing Union system due to sanctions.

The Reserve Bank of India (RBI) said deals with Iran must be settled outside the Asian Clearing Union (ACU) system, used by central banks of member nations to settle bilateral trades.

Peimani says Iran is using small banks for oil trade operations temporarily. However, it will have to turn to reputable banks in long-term.

"Meanwhile, India reduced its oil import from Iran last year after the United Nations approved next round of sanctions, while the United States and the European Union imposed additional restrictions," Peimani added.

The State Bank of India and the European-Iranian Trade Bank (EIH Bank) have arranged the payment operation temporarily, but both sides are seeking a long-term solution.

A number of Indian oil companies such as Reliance refinery company reduced oil trading with Iran in recent years, particularly with an eye toward United Nations sanctions. Although Iran holds significant opportunities for Indian oil companies, the risks involved have mounted over the past couple of years, as sanctions and other financial restrictions have tightened.

India's biggest oil refiner Indian Oil has said it did not expect any supply shortages because of the payments problem, but other Indian refiners have said they were making contingencies in case of disruption.

India is the biggest buyer of Iranian crude among ACU members, with state-owned refiners and privately owned Essar Oil taking around 400,000 barrels per day.

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