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India gives in to US pressure, fully stops import of Iran oil

Indian decision comes amid pressure from the Trump administration, which had called on India and 7 other countries to stop the import of Iranian crude.

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New Delhi: India has completely stopped the import of oil from Iran under pressure from the US, multiple sources have told ThePrint. New Delhi is, however, negotiating with Washington to allow it to procure pending shipments for which contracts have already been signed with Iran.

India’s decision is in adherence with a directive from the Trump administration, which called for New Delhi to end to all its import of crude and petroleum products from Tehran.

India and seven other countries that rely on Iran for their energy needs were granted a six-month waiver by the US last November after Washington walked out of the nuclear deal and imposed multiple sanctions on the Rouhani regime, particularly over crude exports that are the mainstay of the Iranian economy.

The deadline for the so-called waiver, also called the Significant Reduction Exemption (SRE), expired on 2 May, according to official sources.

“We have some slack for shipments on the high seas or where contracts were already concluded for offtake, so we are negotiating with the US to at least allow those to go through,” said an official who is involved in the talks and spoke on condition of anonymity.

The official said the discussions are going on with the US government but nothing positive has yet come out of the talks.

According to another official from the Ministry of Petroleum and Natural Gas, however, India is hopeful that the existing contracts and orders that were already placed with Iran will not be halted.

While Iran, which continues to rely on oil sales to run its economy, has been under sanctions for several years, India has always found a way to manoeuvre around them. This, however, is the first time that India has completely stopped procuring oil from the country, sources added.

Also read: Iran steps away from parts of 2015 nuclear deal


Oil on the way

Sources said that at present, two vessels loaded in April with 4 million barrels of crude from Iran are expected to reach India this month. Of these, one is expected to reach the Paradip port in Odisha and the other Kochi in Kerala.

The official from the Ministry of Petroleum and Natural Gas added that India had been taking steps to reduce its imports from Iran since the US walked out of the Iran nuclear deal, the Joint Comprehensive Plan of Action (JCPOA).

New Delhi has considerably reduced its oil imports from Iran over the last six months.

India has been Iran’s second largest customer after China. New Delhi imports 80 per cent of its crude oil requirements and Iran accounts for 13 per cent of these imports, according to the oil ministry.

But between January and April this year, crude imports from Iran have gone down by over 40 per cent. In April, India’s imports from Iran dropped by 57 per cent compared to the corresponding month in the previous year, according to data by the Directorate General of Commercial Intelligence and Statistics (DGCIS).

Consumption, however, is rising. In 2018-19, India’s total oil consumption was 211.6 million metric tonnes compared to 206.2 MMT in the previous year — an increase of 2.7 per cent, according to official data.

US to ‘make up’ for Iran

While the Modi government has downplayed the adverse impact of its decision of not procuring oil from Iran, sources said this will impact supplies going forward.

Sources added that the US is taking all steps to make up for the supply shortage that India may face due to the absence of Iranian oil. The US is now pushing India to increase its purchase of shale oil.

This was among the main agenda for which Alice Wells, US principal deputy assistant secretary of state for South and Central Asia, visited India last month before the waiver expired. Washington is presently also undertaking measures to keep the international prices of crude under control.

India, meanwhile, is also looking at Saudi Arabia and UAE to come to its rescue.

There appears to be some positive news on that front. “We have always assured India that UAE is ready to cover any shortfall in its oil imports,” UAE Ambassador to India, Ahmed Al Banna, told ThePrint. “We have stood beside them in the past as well when there were embargos on Iran. We are working with our Indian partners closely.”

According to oil ministry data, Iraq is the top supplier of crude to India followed by Saudi Arabia. Iran remains the third largest supplier of oil despite a reduction in inbound shipment. Besides these three, UAE and Venezuela have also supplied a large chunk of India’s crude requirements.

Sources said an increased amount of imports are likely from Saudi Arabia from June. But the quantum has not been decided yet as all these issues will be clearer once a new government takes charge.

Also read: Inside India’s barrel of concerns: US sanctions, alternative to Iran oil and good old ties


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  1. The complete halt to Iranian oil imports was expected. Though India has been assured of alternate sources, the loss will be felt due to favourable terms on Iranian oil imports. One presumes that India negotiated a deal with US over the operations of Chabahar port since there is no fallout yet over Chabahar. One believes that when the INSTEX payments system of the EU becomes operational, India could restart imports. Another key gamechanger would be the creation of buyers club. China’s representative had visited Delhi last month on this issue. Were a buyers group created, the entire oil scenario could drastically change with OPEC losing its stranglehold over oil. Hence, one hopes this disruption is transient.

  2. It will not end with banning the export of Iranian oil. The United States is spoiling for war, no more justified than the invasion of Iraq. President Xi spoke to King Salman, who sometimes overrides his impetuous son’s hasty decisions. Trying to deal with the malaise at source. Perhaps India could speak to “ Friend Bibi “. The looming conflict would hurt India very deeply, starting with the disruption of the oil market, already near $80.

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