India has confirmed that it has yet to decide whether it will completely stop buying oil from Iran in the face of imminent sanctions placed on Tehran by the US.
After China, India is the second-largest importer of Iranian oil. Although it has already reduced its reliance on oil from the Middle Eastern nation, India has not determined if it will seek all its supplies from elsewhere.
Iranian Foreign Minister Mohammad Javad Zarif said that he expects that Iran will continue to sell oil to India despite the threat of financial penalties from the US for doing so.
Zarif said that India wants to maintain the bilateral ties between the two nations, telling the United Nations General Assembly in New York last week that Iran’s “Indian friends have always been categorical in terms of their intention to continue economic cooperation and the import of oil from Iran.” This will serve as a significant boost to the troubled nation, which has struggled after US President Donald Trump withdrew from the previous cooperation agreement between the US and Iran.
Stating that “Iran has always been a reliable source of energy for India,” Zarif noted that the two countries have a “comprehensive cooperation,” which has allowed them to develop a tie “that includes energy cooperation.”
With China already buying significant quantities of oil from Iran ahead of the sanctions, which come into force early in November, it is clear that the Asian nation is trying to stockpile ahead of any disruption to the market. Whether India choose to do the same is unclear, but Beijing has been consistent in its stance that it has no intention of stopping its purchase of Iranian oil completely.
Back in 2015, former US President Barack Obama ushered in a new era of cooperation with Iran that sought to limit the latter’s nuclear expansion program. In exchange for this, the US lifted sanctions on Iran’s oil exports and its ability to bank overseas. However, since President Trump came into power, he has looked to dismantle the deal and put the sanctions back on the table.
Meanwhile, Iran is hoping for assurances from other nations ahead of November that it can still trade with them.
Zarif said that his plan for negotiating around the sanctions would be to “avoid dollars.” At the same UN assembly, he told the press that Iran is already working to create bilateral agreements that would see trading in foreign currencies and reduce any need to work with US dollars, which would be sure to impact its economy.
Suggesting that the plan “may even be profitable,” Zarif suggested that its function would be to export goods in one nation’s currency and import them in another nation’s currency. He said that the participating nations could then “balance it out in a non-dollar currency.”
While oil-importing nations that receive supplies from Iran are facing serious pressure from the US to cease all purchases before November, Iran hopes that a move away from US dollars will make it possible for these countries to still go ahead with their current practices. However, given that many international banks are based in dollars, there will likely be some impact on most overseas transactions.
Another way that nations could fall foul of US sanctions is if an American employee works for an international company that conducts a transaction through Iran, according to US negotiators.