To stem rupee slide, India may look to lock in oil futures

Cornelia Mascio
Settembre 22, 2018

India is likely to resist the American pressure on complying with the reimposed Iranian sanctions as it has been a traditional policy of New Delhi to enforce only UNSC-authorised sanctions, a Congressional report has told lawmakers.

The EU has been discussing with India that it was in the process of coming out with a payment solution as using U.S. dollars for oil purchase will be restrained post-November 4 when the United States sanctions come into force.

As the USA sanctions on the import of Iranian crude oil loom large, India is engaged with the European Union for an alternative channel for making payments to Tehran for buying petroleum products, sources said Wednesday.

Tens of millions of India's citizens are Shiite Muslims.

In May, US President Donald Trump pulled out of an worldwide nuclear deal with Iran and announced new sanctions against the country, the third-largest producer among the Organization of the Petroleum Exporting Countries (OPEC).

Iran is India's third-largest oil supplier behind Iraq and Saudi Arabia. Some sanctions took effect on August 6, while those affecting the oil and banking sectors will start from November 4.

Among the financial pathways under discussion in Brussels and other capitals: Devising an alternative - free from USA influence - to the current electronic system used to transfer money from place to place, European officials told NBC News. India is the second-biggest client of Iran and sources almost one-tenth of its crude supplies from there.

India has also been hoping that the USA will give it some relief from the sanctions. The remaining 45 per cent payment was remitted in rupees in accounts Iranian oil companies had with the UCO Bank. Oil refiners such as state-owned Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals (MRPL) could use UCO Bank or IDBI Bank to route oil payments to Iran, the official added. But the U.S. told allies not to expect waivers as it boosts pressure on Iran.

The official said refiners have booked oil cargoes from Iran for the current month as well as for October.

India is engaged with the United States and other stakeholders to ensure its energy security and national interest, the foreign ministry spokesman said on Thursday, as Washington is set to tighten sanctions on Iran's oil and banking sector.

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