With comprehensive US sanctions on Iran looming, India is considering a 50% reduction in its oil purchases from Tehran.
Indian officials discussed the possibility in talks with American counterparts last month in New Delhi, according to “people familiar with the matter”.
The sources said a 50% cut would allow India to claim a waiver from any American punishment when full US sanctions on Iran’s oil, gas, and financial sectors take effect from November 5.
Donald Trump ordered the expanded restrictions in May when he withdrew the US from the 2015 nuclear agreement between Iran and the 5+1 Powers (US, UK, France, Germany, China, and Russia). Under the provisions, any foreign company with US links which continues trade with Iran can be heavily fined.
The sources said Indian officials told American representatives that they cannot completely halt oil imports from Iran, which is now selling at discounted rates. New Delhi is hoping for American agreement in the next rounds of talks in September.
A 50% cut would be a serious blow to Iran’s hopes to weather the US sanctions and preserve its fragile economy. India is Iran’s second-largest customer after China, taking about 10% of its oil imports from the Islamic Republic.
After the 2015 nuclear agreement, New Delhi more than doubled its purchases of Iranian oil, from 11 million tons in 2015-16 to 27.8 million tons in 2016-2017. However, with the rise in US-Iranian tensions and the threat of more American sanctions, oil imports fell back to 22.6 million tons from March 2017 to 2018.
While India has maintained and even increased purchases in recent months, stockpiling oil and taking advantage of Iran’s discounts before November, two of its largest refiners — Reliance Industries and Nayara Energy — have said that they are drawing down their intake of Iranian crude.
Another German Company Pulls Out of Iran
Deutsche Bahn is the latest Germany company to suspend business in Iran.
The State-owned railway and engineering firm is phasing out all projects by the end of September. It joins
Deutsche Telekom, Siemens, and Daimler in halting trade and investment because of the prospect of punishment from expanding US sanctions.
A Deutsche Bahn corporate spokeswoman said the firm’s subsidiary DB Engineering & Consulting had been involved in two initiatives: “Both projects will be ended in August and September 2018 respectively. Due to the altered banking practice we have sought to bring the contract to an amicable and timely conclusion.”
In May 2017, Deutsche Bhan signed a memorandum of understanding with the Iranian railway operator Bonyad Eastern Railways for the first project to identify and address potential in rolling stock and organization. The second project is a consultancy contract for the Iranian state railway RAI that includes restructuring.
Other European firms that have announced a suspension, despite the European Union’s consider of blocking measures against the US sanctions, include French energy giant Total, French auto manufacturer PSA, the world’s largest shipping company Maersk, French aviation manufacturer Airbus, Air France, and KLM.