US sanctions on Iran: Indian Oil chairman confident about oil supply

CRUDE-OIL

India, the fourth largest oil importer in the world, may cut imports from Iran following the White House’s ultimatum to cut Iranian oil imports to 'zero' by November 4.

India was initially defiant and indicated that it would not comply.

In an interview with CNNMoney, joint secretary for international cooperation at the Indian petroleum ministry, Sunjay Sudhir, said only sanctions by the United Nations are recognised by India, not unilateral ones put forward by the US.

The Indian government also asked domestic oil companies to prepare a blueprint of alternative payment channels for procuring the Iranian oil post-November. Iranian imports will either have to be replaced by purchases from Kuwait or Saudi Arabia or will have to be paid for in alternate currency other than the Dollar.

According to a report by Bloomberg, Indian Oil chairman Sanjiv Singh said Saudi Arabia can alone cover most of the world’s supply shortfall in case the US has its way and shuts down Iranian imports. He assured that there was nothing that India could not procure or produce.

But India cannot afford to alienate itself from Washington because a large part of its service sector is dependent on US markets. If Trump decides to act upon his threat of sanctions, many Indian companies may lose business from the US.

Moreover, Iran is also important from India's point of view as it is strategically located. Trump's ultimatum, hence, puts India in a dilemma.

As a gesture of goodwill, Trump tweeted on Saturday, as per his request, Saudi Arabia will increase its oil production to meet any global shortfall. He said the Gulf nation agreed to increase production to up to two million barrels.

Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference...Prices to high! He has agreed!

— Donald J. Trump (@realDonaldTrump) June 30, 2018

Although there is no clear decision on what step to take next, Indian Oil's Chairman is confident that India can and will ‘manage.’