Why in News:

• U.S. refuses to extend sanctions waiver to India on Iran oil import and oil marketing companies stop placing orders from Iran

Details:

• India has a “robust plan” to import oil from other countries, the Ministry of External Affairs said, the deadline for the U.S. sanction waiver for oil imports from Iran expired without an extension from the U.S.
• Last year, the U.S. re-imposed sanctions on Iran, prohibiting countries from importing oil from it, but waived these sanctions for eight countries, including India. That waiver has expired and the U.S. announced that it would not be extending it.
• There is a robust plan in place to import oil from other countries,
• Indian oil companies, meanwhile, have stopped placing orders for Iranian oil.
• Prior to the sanctions and the subsequent reduction in the quantity of oil imported from Iran,
• Iran accounted for about 10% of India’s oil requirements.

Iran and India’s oil basket:

• India, the world’s third-biggest oil consumer, meets more than 80% of its crude oil requirements and around 40% of its natural gas needs through imports.
• Domestic oil and natural gas production have been declining for the last few years, even as the energy needs of the economy have grown.
• India is Iran’s top oil buyer after China. In 2018-19, it imported 23.5 million tonnes from Iran; in the previous year, almost 10% of its total 220.4 million tonnes of crude imports was from Iran.
• Iran was the fourth largest supplier of oil to India in 2018-19, and other suppliers may not provide the same benefits in the form of price and credit facilities.

Iran responded

• Iran threatened to close the Strait of Hormuz, a neck of water between its southern coast and the northern tip of the sultanate of Oman.
• Strait of Hormuz lane through which a third of the world’s seaborne oil passes every day.
• It is a threat that Iran has made earlier, too and this strategic area has seen several flashpoints erupt in Tehran’s fraught relationship with the West over the years.