Robert Harneis –TDO- (FRANCE) - Two state-owned oil refiners have signed contracts to buy crude oil after the November 4 deadline that Washington declared for ceasing imports from Iran.

After some hesitation, India will defy US sanctions and continue importing oil from Iran after a November 4 deadline, easing concerns over the country’s energy security but setting up a possible showdown with Washington.

Petroleum Minister Dharmendra Pradhan said two state-owned oil refiners, Indian Oil Corporation and Mangalore Refinery and Petrochemicals, had signed contracts to import 1.25 million tonnes of Iranian oil next month, Mint newspaper reported.

Reuters said that Indian Oil would buy six million barrels of oil and Mangalore Refinery and Petrochemicals three million barrels.

The Trump administration re-imposed an initial tranche of economic sanctions on Iran in August, and will implement a second tranche in November. Last applied from 2012 to 2015, the sanctions are an attempt to impose a harsher agreement on nuclear energy on the Iranian government. The United States also aims to include missile development and foreign policy issues in any new agreement. Apart from the usual need for US Presidents to appear ‘strong’, Trump is keen to do the bidding of the Israel lobby that fears Iranian influence, greatly increased since the United States destroyed the power of Iraq in 2003.

Secretary of State Mike Pompeo said on a visit to India in September that some waivers from the sanctions might be granted to countries buying Iranian oil but Minister Pradhan said on Monday he was not sure India would get a waiver.

The world’s third-largest oil importer, India relies upon Iran for 9.4% of its crude supplies: in 2017-18 the country brought in 220.4 million metric tonnes of oil from a number of sources.

India also continued to buy Iranian oil in 2012-2015, but shipments had to be sharply reduced to avoid exposure to the US financial system. However, this time it is likely to skirt Washington’s embargo on dollar payments by using rupees, while payments will probably be routed through Indian banks to avoid any US financial intervention.

Oil prices have soared in response to fears of supply cutbacks, putting pressure on the Indian economy and leaving Delhi with few options. Brent crude prices are now hovering around US$86 a barrel and some global traders are betting that they will go past US$100. The recent weakness of the Rupee has also pushed up procurement costs for Indian buyers.

Delhi is hopeful that Saudi Arabia and other members of the Organization of Petroleum Exporting Countries will heed US calls for production to be boosted by one million barrels per day, as promised in June, which might help bring benchmark prices down.

Russian President Vladimir Putin said at the Russian Energy Week question and answer session that President Trump who is complaining about high oil prices, should look in the mirror if he wants someone to blame. The United States government is conducting a fiercely aggressive foreign policy against three of the world’s leading oil exporters – Russia, Iran and Venezuela – which is encouraging price rises.

India has also displeased the US by agreeing to buy the Russian S-400 anti-aircraft defense system. The Indian government has good relations with Iran and is currently encouraging the development of the North South transport corridor that will enable goods from Mumbai to reach Europe quicker and cheaper through the Iranian port of Chabahar. It will also enable easier trade the with Central Asian states.

The United States will now have to decide how to treat India with whom its defense sales are growing and just how many major countries it can afford to quarrel with at any one time.

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