Published: Wed, October 10, 2018
Money | By Ralph Mccoy

India buying Iran oil in defiance of Trump sanctions

India buying Iran oil in defiance of Trump sanctions

The US has been imposing new sanctions on Iran's oil industry after it withdrew from the Iran-US nuclear deal.

United States crude was down 0.7 percent at $73.80 a barrel.

"We view this [oil] as one of our top national security priorities", a senior administration official told the Free Beacon at the time.

A gas flare on an oil production platform in the Soroush oilfields is seen alongside an Iranian flag in Iran, July 25, 2005.

DUBAI - Iran's Oil Minister Bijan Zanganeh has dismissed claims by the Saudi crown prince that Saudi Arabia can replace sanctions-hit Iranian oil in the market as "nonsense".

In a sign that Iran oil exports won't fall to nothing from November, India will buy 9 million barrels of Iranian crude next month, Reuters reported on Friday.

Trump administration officials told the Free Beacon in June they are "not granting waivers" to some countries importing Iranian oil, but walked that statement back late Monday when a USA official disclosed it is now actively working to grant "individual countries" waivers from the new oil sanctions.

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

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Despite US sanctions, India will buy oil from Iran in November
China is reportedly reducing its oil imports from Iran , though it's not likely to fully comply with the USA demands. Of the 220.4 million metric tonnes (million MT) of crude oil imported by India in 2017-18, about 9.4% was from Iran.

USA sanctions against Iran will kick in from 4 November, which will block payment routes.

U.S. president Donald Trump in May withdrew from the 2015 nuclear accord with Iran, re-imposing economic sanctions against the Persian Gulf nation.

The news of India's continued importation of Iranian crude had a positive effect on oil prices, with Brent crude down 1.6% to $82.79 at the time of writing on Monday morning. The Trump administration is considering waivers on sanctions for countries that are reducing their imports.

UCO Bank had in the previous round of sanctions handled rupee payments.

In the previous round of USA sanctions on Iran from 2012 to 2015, India continued to purchase Iran's oil although it was forced to dramatically reduce its purchases to protect its wider exposure to the us financial system.

Alongside potential waivers on Iranian sanctions, oil supply is seemingly back on the rise with Libya recently boosting oil production to 1.25mbpd (200kbpd more than the September average).

Besides blocking of banking channels from November, the absence of payment mechanism may pose a challenge to the transportation of the oil as Iranian crude is bought on a CIF basis and shipped on Iranian tankers.

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