India to Import oil from IRAN

Prelims level : India Bilateral Cooperation Mains level : Effect of policies and politics of developed and developing countries on India’s interests
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In News:

  • Two Indian state-run oil companies have placed orders for Iranian oil to be delivered in November.
  • The move comes in apparent defiance of U.S. sanctions targeting Iran’s crude oil exports that come into effect on November 4.


  • The two companies who placed order are Indian Oil Corporation and Mangalore Refinery and Petrochemicals, with a total order quantity of 25 million tonnes of crude, according to the Petroleum Ministry
  • According to an executive order (EO 13846) issued by President Donald Trump, all American and non-American entities were given a six-month “wind-down” period from May 2018, in which to “zero out” all transactions with designated Iranian oil companies and port operators
  • On November 4, a second round of U.S. sanctions against Iran will target the oil industry, and impose penalties on oil companies, refineries, insurers and transport companies dealing with Iran
  • With the advance orders placed for November, has made it clear that India will not “zero out” its oil intake from Iran. While private companies like Reliance and Nayara Energy (Essar) have had to drastically reduce their purchases, public sector companies, who are more immune to U.S. strictures, and already have alternate banking arrangements and a “rupee-rialmechanism, are staying the course for now.
  • Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of substitute crudes – Saudi Arabia, Kuwait, Iraq, Nigeria, and the US

Why India should continue to buy oil from Iran?

  • Currently, it’s a litmus test for India Iran relations because if India bows before USA pressure it will freeze the relations between India Iran
  • India needs Iran support in reaching the central Asia and Afghanistan through chhabahar port
  • Its oil is cheaper than its counterparts producing
  • TAPI pipeline project is important for India to secure its energy needs and for that India needs Iran’s oil supply. And also, if USA succeeds in cutting of the relation between India and Iran it will isolate India in world stage as ally and a dependent on USA
  • It will bolster the china-Iran relations because china is buying oil from Iran despite USA sanctions and it will create new hostile nations in west of India besides Pakistan.
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