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Iran Threatens to cut off Oil to India

by on 01/12/2011

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oil-drill-5431Bharat is heavily dependent on Oil Supplies from the Gulf, Arabia and Iran. Iran is the second largest supplier of oil to Bharat, and in good times, this gave Delhi some leverage in Tehran. Now all this is falling apart. the Indo-Oranain relationship is in tatters, and now oil which once bound them in a commercial embrace is now causing deep strains in the relationship. India owes Iran 1 billion Euros currently and Tehran has refused to extend the credit to Delhi beyond January.

Last month the Bharati Foreign Minister visited th UAE trying ot secure alternate oil supplies. Tall promises were made, but there were not concrete contracts signed to prevent a disruption of oil supplies to Bharat. In a sure sign that the UAE negotiations failed, the Bharatis are purchasing oil at exorbitant prices from the Spot Market. In a sign of the times India’s largest buyer of Iranian crude Mangalore Refineryimported 2.6 million barrels from the spot market to prevent a sever shortage of oil in Bharat.

Iran has threatened India with an end to soil supplies if it does not overcome its hangups about US sponsored sanctions. Delhi is stuck between the devil and the deep sea. The bone of contention is payments dispute with Iran, which threatens to disrupt oil supplies. Delhi acquiesced to US sanctions targeting Tehran.

At issue is method of payment  Delhi should utilize to pay for it $12 billion in oil imports. Bharat’s State bank has refused to settle Iranian invoices using the agreed upon clearinghouse system run by the regional central banks. The Bharati State Bank will no longer be issueing Letters of Credit to the National Iranian Oil Co (NOIC).

US President Barack Obama has made sure Bharat agreed to the sanctions against Iran choking sources of its revenues.

A panicked Oil Secretary S Sundareshan is holding midnight meetings with the National Iranian Oil Co (NIOC) later this week.

Iran has agreed to keep 400,000 barrels per day of crude oil flowing through January, but beyond that, Bharat will have to find  a permanent solution to the payments issue.

Indian oil companies will be intense scrutiny, especially in the United States and will face punitive sanction if they provide guarantees for Iranian Oil.

Source: TimesOfBombay

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From → India, Iran

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