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After the Trump government announced Monday that the United States would not renew its six-month waivers to third countries for their continued purchase of Iranian oil, India has been put in an extremely difficult position, and it is unclear still not in what way does the nation go. Will India challenge US sanctions and continue to import Iranian oil, or will the country's leaders be willing to lose their third-largest supplier of crude oil to maintain good relations with the United States? United?
India is the world's third largest consumer of oil and nearly 80% of its oil demand is satisfied by imported oil. India is also the second largest Iranian oil buyer after China. All this to say that the loss of Iranian oil due to sanctions would be a blow for the rapidly developing sub-continent. India is one of eight countries to obtain a waiver to continue importing Iranian oil (albeit in smaller quantities) for a six-month grace period. This period ends on May 1st, leaving India (not to mention China, Japan, South Korea, Taiwan, Turkey, Italy and Greece).
There has been much speculation about the approach that India will adopt, with many editorials claiming that they will challenge the United States and others claiming the exact opposite, that they will not be able to do so. they will bridge the Iranian oil gap with the supply of crude oil. from other oil producing countries. India's Minister of Petroleum and Natural Gas, Dharmendra Pradhan, gave us a clue on the direction taken by the Indian subcontinent.
Pradhan announced Tuesday on its Twitter website that India would fill the gaps left by Iranian oil with imports from other major oil producing countries, saying that "Indian refineries are fully prepared to meet the demand national gasoline, diesel and other petroleum products ". According to Reuters, Indian refineries are already planning to increase their imports from member countries of the Organization of the Petroleum Exporting Countries (OPEC), as well as Mexico and the United States.
On Monday, when the Trump government announced that Iranian oil exemptions would not be renewed, the president himself said that crude oil shipments from Saudi Arabia and other OPEC countries are ready to "largely compensate" for supply losses due to US-imposed Iranian Oil Sanctions. Saudi Arabia, for its part, said it would establish a strategy, in coordination with other oil-producing countries, to ensure that they would produce enough crude oil to meet any new demand and maintain a balanced global market.
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India is already well on its way to being completely weaned off Iranian oil thanks to the terms of the six-month waiver granted by the United States in November 2018, which required the beneficiaries of this waiver to import very small quantities. Iranian oil (derogations are officially called significant reduction exceptions). India had already almost halved its imports of Iranian oil during this period.
However, many energy analysts are not convinced that the US decision – which surprised many market insiders and pushed up crude prices when the announcement was made Monday – will help unilaterally cut Iran from the international oil market. The Chinese authorities have already publicly expressed their disgust for the decision and some analysts believe that China could even increase Iranian imports in defiance of US policy. Bjarne Schieldrop, Chief Product Analyst at SEB, said on Tuesday: "We think China can not and will not back down this time and we could easily see an increase in Chinese imports of Iranian oil reaching maybe 1 million bpd. "
As far as India is concerned, analysts believe in the same way that it will not be the end of Iranian imports. In a note published Monday, the same day as the Trump government announcement, Eurasia group analysts said: "New Delhi will significantly reduce imports but will probably maintain about 100,000 b / d of Iranian imports paid for with payment in rupees. It's less a decision on energy security than a political decision […] In recent months, India has made considerable efforts to significantly diversify its sources of energy in anticipation of this situation. But India's ties with Iran are important and historic, and New Delhi will strive to maintain some links "
By Haley Zaremba for Oilprice.com
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