By Pallavi Gupta:
In December, 2011 sanctions were imposed on Iran by the USA and the European Union (EU) that aimed at preventing other countries from importing Iranian oil and doing transactions with its Central Bank. Despite Iran’s rejection of accusations by Western nations that its nuclear program is in fact a weapons program, EU aims to cut off all shipments and funding to Iran.
The US and EU are urging India and other countries to buy less Iranian oil and to find alternative sources. Iran’s oil exports are under pressure from sanctions driven by the US, and while countries of Europe and Asia are on board, India isn’t.
India has had close economic and commercial ties with Iran for years. An embargo on Iranian oil will cripple the Indian economy. Despite the US and European Union sanctions, India would do whatever it takes to buy Iranian oil; finding a replacement of such a large scale is difficult as Iranian oil contributes to 12% of India’s oil imports. Many Indian refineries are geared up to using the type of crude oil that Iran exports, and changing it would be difficult. India is the second largest importer of Iranian oil after China, as it still imports 70% of its oil.
The country has resisted pressure by the US and EU which are using their influence on Iran to resume talks about its nuclear program. Prime Minister of India, Manmohan Singh has given a strong message to the European community that issues with Iran’s nuclear program can and must be solved by giving utmost scope to diplomacy.
India continues to import crude oil from Iran and has plans to increase bilateral trades which have disturbed the relations between India and US. It has been reported that to circumvent these transactions India might use gold instead of dollars to continue buying the oil. However, India has neither confirmed nor denied the option of paying in gold for Iran’s oil and is now in the process of finding ways to pay for Iran’s crude oil without breaching sanctions.
The oil minister S. Jaipal Reddy said, “India would only abide by the sanctions imposed by the United Nations and continue to explore all options on oil imports”. The US is reportedly threatening India with penalties if it does not comply with Washington’s sanctions against Iran and is worried that India may sidestep payment restrictions. It is being accounted that Obama may impose penalties on India as early as June if India does not stop buying Iranian oil.
It is in national interest that it continues to import oil from Iran which has clearly made the US furious. India is being pressurized from all sides. It is completely understandable because if Iranian oil was taken off the market that would cause a hike in oil prices, and the country would end up destabilizing the global market economy.
Image courtesy:Â http://www.ibtimes.com/articles/295917/20120209/india-iran-clever-deal-iranian-oil-rupee.htm