India, the second biggest crude oil customer for Iran, may cut its imports from the Islamic Republic by half to secure a waiver from the U.S. to continue with shipments, Bloomberg has cited “people familiar with the matter” as saying.
According to Bloomberg’s report, officials from the U.S. had discussed the issue of a conditional waiver on sanctions in talks last month in New Delhi, requesting not to be identified as the discussion was private. India has expressed its inability to scrap oil imports from Iran completely as its supplies are being offered at competitive rates, the people said. New Delhi expects a response as early as next month when talks resume.
India, the world’s third-biggest oil consumer, meets more than 80 percent of its requirements through imports. Iran is its third-largest supplier after Iraq and Saudi Arabia, and meets about 10 percent of total needs.
Immediately after Washington’s withdrawal from Joint Comprehensive Plan of Action (JCPOA) or Tehran’s nuclear deal with world powers, US insisted that it aims to completely cut Iran's oil exports.
Nevertheless, President Donald Trump’s administration was later forced to reconsider its plans after countries including China and India — which together comprise about half of Iran’s oil exports — expressed their inability to halt shipments. Washington is now said to aim at a 50 percent cut in exports when it reimposes energy sanctions in early November.
The European Union has also pledged to resist US sanctions on Tehran by implementing legislation allowing European businesses not to comply with US measures against Iran, for example, by trading in non-dollar denominated currencies, so they do not risk being penalized by Washington.
Nevertheless, after the first batch of US sanctions against Iran came into effect last week, giant European companies, including France's oil major Total and its carmaker Renault suspended plans to invest in Iran.
Furthermore, according to Bloomberg News, “It doesn’t matter that European governments oppose Trump’s withdrawal from the Iran nuclear deal. Politicians and bureaucrats may work on ‘the continuation of Iran’s exports of oil and gas,’ but it’s companies, not governments, that buy Iran’s oil. The threat of exclusion from the U.S. market and banking system is enough to stop them buying it, international shipping companies from moving it and insurers from covering that trade.”
Moreover, analysts believe Iran could still see its oil sales drop by around 700,000 barrels per day from current level of around 2.3 million.
Based on Tehran’s new decision, Iran has cut another eighty cents from the price of its light grade oil offered to be sold to the Asian buyers next September. Tehran has also decided to offer sixty cents discount for each barrel of its heavy crude oil sought by many Asian countries.
India imported 597,000 oil barrels per day from Iran during past six months.
Meanwhile, OPEC reported last Monday that Iran’s oil output has fallen more than 85,000 per day since President Trump dropped JCPOA last May.
OPEC also declared the world’s total oil supply rose by 680,000 barrels a day in July, to average 98.53 million barrels a day.