In a major shift in India's crude basket and bilateral trade, the country's crude oil imports from Iran dropped to zero during the current financial year from a historic high of 27.2 million tonne (MT) in 2016-17.
The majority of Iran crude was replaced by imports from the United States that increased from zero in 2016-17 to 10.8 MT during the April to January period of the current financial year. India started cutting Iran imports after the Donald Trump administration tightened the sanctions on the oil major and withdrew unilaterally from the nuclear deal.
In 2015, Iran, the US, China, Germany, Russia, France, and the UK had signed the deal that led to the lifting of sanctions on Iran. However, the Trump administration withdrew the US from the deal in 2018 and re-imposed sanctions on Iran. The other countries that replaced Iran crude in India include Saudi Arabia, Iraq, and Nigeria.
In 2017-18, the imports from Iran were seen at 22.6 MT, while it dipped to 23.9 MT and 1.7 MT respectively in 2018-19 and 2019-20. During the same period, crude oil imports from the US increased to 1.9 MT in 2017-18, 6.2 MT in 2018-19, and 10.3 MT in 2019-20, based on petroleum ministry data. During the April to January period, crude oil imports from the US stood at Rs 16,614 crore in value terms from zero in 2016-17.
After Joe Biden took charge, there were speculations that the US may revisit sanctions on Iran. According to the media reports, Iran officials have already approached the Indian national oil companies to restart imports from that country. China on the other hand did not stop Iran imports despite the US sanctions.
India is importing crude oil and gas from the US through a combination of term contracts and on a spot basis. During the same period, India's crude oil and petroleum products import bill increased by 56 percent. The country's import bill stood at Rs 5.42 lakh crore in 2016-17 and increased to Rs 8.43 lakh crore in 2019-20.
Last week, Biden had decided to continue the national emergency declared with respect to Iran and to extend sanctions against that country. He added that 'Iran continues to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the US.'
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