Why India's real Iran dilemma isn't oil

[rama]

Barack Obama signed into effect the Iran Threat Reduction Act on December 31, 2011. That Act bars foreign banks from the US if they conducted transactions with the Central Bank of Iran (CBI), a move intended to choke off Iran's oil incomes, its main source of revenue.

The law calls for US financial sanctions on anyone settling oil trades with CBI, and comes into effect from June 28. The exceptions are White House-blessed waivers or a very tight oil market.

This week, European Union (EU) ambassadors announced their own Iran oil embargo. From July 1, Europe, which takes in about 600,000 barrels per day (bpd) from Iran, will close its market. This decision was taken despite fierce opposition from Greece, which gets a lot of its debt repayment from Iran in oil.

Payment Problems

India's life just got more complicated. India is Iran's third largest oil importer after China. In December 2010, the Reserve Bank of India (RBI), fearing US sanctions on India's financial sector, had walked out of the Asian Clearing Union that cleared Iran's oil payments.

This started a merry-go-round as India scoured the world to pay Iran for its oil and simultaneously tried to reduce its dependence on Iranian oil. India began to use one of its small nationalised banks with little or no exposure to the West, to pay for the oil.

The first stop was Germany's EIH Bank, but in a few months that stopped. Turkey's Halkbank has been processing India's payments to Iran since then, though there were palpitations when Halkbank refused a BPCL application. This week, Halkbank stated that it remained open for business for India.

Can India Handle It?

As of now, India's payment options are fairly varied. Some goes through barter, offset against Iranian imports, mainly tea and some jewellery, some in rupee trade (RBI needed a lot of convincing) that may be utilised in building Indian investments in Iran or vice versa; some perhaps, in a currency like yen (though the Japanese may not agree) and a large sum through Turkey until that stops.

According to some diplomatic sources, Iran had asked India for yuan as a trading currency. But that's unacceptable to India. There's also wild talk about Venezuela or even Brazil to route Indian payments. But India is not even going down that path. After an Indian delegation travelled to Iran to discuss oil imports, oil minister Jaipal Reddy said India would buy oil from Iran because the terms were "favourable", euphemism for Iran sweetening oil deals for India.

Non-Iran Suppliers

Meanwhile, India has been reducing oil imports from Iran, ever since Saudi Arabian King Abdullah's January 2006 visit here. Iraq, which is rejoining the global oil market, is also a big oil source. Then there is Nigeria, though internal problems there may impact its capacities soon.

Thus, there is unlikely to be an oil supply problem in the world, despite the IMF hyperventilating about a "supply shock". Between the Saudis, Iraqis, Libyans and Russians there is enough extra oil, close to 1 million bpd more oil may be coming from these producers alone. Besides, the 600,000 bpd that Iran currently sells to the EU will soon be free for countries with the nerve and muscle to ignore sanctions.
Why India's real Iran dilemma isn't oil - The Economic Times

 

[Tshering22]

Actually we must remain Iran's oil clients as an alternate to over-dependence on Arab states. If RBI's chiefs could simply accept the Rupee-Toman payment scheme, it would be so much more easier. BTW I heard that we've started paying in gold terms. If that's true, then problem solved.

 

[SinoChallenger]

Barack Obama signed into effect the Iran Threat Reduction Act on December 31, 2011. That Act bars foreign banks from the US if they conducted transactions with the Central Bank of Iran (CBI), a move intended to choke off Iran's oil incomes, its main source of revenue.

The law calls for US financial sanctions on anyone settling oil trades with CBI, and comes into effect from June 28. The exceptions are White House-blessed waivers or a very tight oil market.

This week, European Union (EU) ambassadors announced their own Iran oil embargo. From July 1, Europe, which takes in about 600,000 barrels per day (bpd) from Iran, will close its market. This decision was taken despite fierce opposition from Greece, which gets a lot of its debt repayment from Iran in oil.

Payment Problems

India's life just got more complicated. India is Iran's third largest oil importer after China. In December 2010, the Reserve Bank of India (RBI), fearing US sanctions on India's financial sector, had walked out of the Asian Clearing Union that cleared Iran's oil payments.

This started a merry-go-round as India scoured the world to pay Iran for its oil and simultaneously tried to reduce its dependence on Iranian oil. India began to use one of its small nationalised banks with little or no exposure to the West, to pay for the oil.

The first stop was Germany's EIH Bank, but in a few months that stopped. Turkey's Halkbank has been processing India's payments to Iran since then, though there were palpitations when Halkbank refused a BPCL application. This week, Halkbank stated that it remained open for business for India.

Can India Handle It?

As of now, India's payment options are fairly varied. Some goes through barter, offset against Iranian imports, mainly tea and some jewellery, some in rupee trade (RBI needed a lot of convincing) that may be utilised in building Indian investments in Iran or vice versa; some perhaps, in a currency like yen (though the Japanese may not agree) and a large sum through Turkey until that stops.

According to some diplomatic sources, Iran had asked India for yuan as a trading currency. But that's unacceptable to India. There's also wild talk about Venezuela or even Brazil to route Indian payments. But India is not even going down that path. After an Indian delegation travelled to Iran to discuss oil imports, oil minister Jaipal Reddy said India would buy oil from Iran because the terms were "favourable", euphemism for Iran sweetening oil deals for India.

Non-Iran Suppliers

Meanwhile, India has been reducing oil imports from Iran, ever since Saudi Arabian King Abdullah's January 2006 visit here. Iraq, which is rejoining the global oil market, is also a big oil source. Then there is Nigeria, though internal problems there may impact its capacities soon.

Thus, there is unlikely to be an oil supply problem in the world, despite the IMF hyperventilating about a "supply shock". Between the Saudis, Iraqis, Libyans and Russians there is enough extra oil, close to 1 million bpd more oil may be coming from these producers alone. Besides, the 600,000 bpd that Iran currently sells to the EU will soon be free for countries with the nerve and muscle to ignore sanctions.
Why India's real Iran dilemma isn't oil - The Economic Times

So........ india ran away in fear as soon as USA's sanctions came down...... now they can't even figure out a way to pay Iran........ they are terrified of Chinese Yuan because it shows our power if india uses its enemy's currency to buy oil.

 

[Nakki Nair]

So........ india ran away in fear as soon as USA's sanctions came down...... now they can't even figure out a way to pay Iran........ they are terrified of Chinese Yuan because it shows our power if india uses its enemy's currency to buy oil.

Run to the toilet before you drop that thing on your keyboard

 

[Solar Flare]

So........ india ran away in fear as soon as USA's sanctions came down...... now they can't even figure out a way to pay Iran........ they are terrified of Chinese Yuan because it shows our power if india uses its enemy's currency to buy oil.

China is paying Iran with gold? What are you smoking these days? India decided to pay Iran in Gold and soon you'll see China following India and doing the same thing.

High Chinese IQ. Gosh

 

[Developereo]

Actually we must remain Iran's oil clients as an alternate to over-dependence on Arab states. If RBI's chiefs could simply accept the Rupee-Toman payment scheme, it would be so much more easier. BTW I heard that we've started paying in gold terms. If that's true, then problem solved.

Hardly.

The US is not going to be fooled by such antics. Either India supports the American demands to isolate Iran economically or it doesn't. If India wants to do business with Iran, then it should stand proud and do so up front. These circuitous moves just make it look silly.

 

[Nakki Nair]

Hardly.

The US is not going to be fooled by such antics. Either India supports the American demands to isolate Iran economically or it doesn't. If India wants to do business with Iran, then it should stand proud and do so up front. These circuitous moves just make it look silly.

But there is a problem here. The trade-off here is between the oil from Iran and the thousands of jobs that depends on outsourcing. The government cannot ignore the problems of the thousands who will be affected in case America slaps some draconian sanctions on us. Would be interesting to see how the government handles the issue.

 

[Developereo]

But there is a problem here. The trade-off here is between the oil from Iran and the thousands of jobs that depends on outsourcing. The government cannot ignore the problems of the thousands who will be affected in case America slaps some draconian sanctions on us. Would be interesting to see how the government handles the issue.

Yes, of course, India hopes the US will understand the dimensions of its national interests and give India an exemption. Whether the US does so or not will eventually depend on what Tel Aviv advises.

 

[NeutralCitizen]

Interesting read thanks.

 

[Holmes]

India plans to settle Iran oil payment in Rupees: RBI

New Delhi: India is considering settling payment for oil imports from Iran in rupees, the Reserve Bank of India deputy governor H.R. Khan said on Monday.

Khan said New Delhi was evaluating different options to settle payment for oil imports from Iran, India's second biggest oil supplier.

"There are different options which are being evaluated. It is a bilateral issue. It cannot be discussed openly," Khan said.

Earlier this month Reuters reported that India and Iran have agreed to settle some of their USD 12 billion annual oil trade in rupees, citing a government source, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher US sanctions.

When asked whether India was considering settling oil payments through rupees, Khan said: "Yes".
http://zeenews.**********/business/...tle-iran-oil-payment-in-rupees-rbi_37948.html

 

[Nakki Nair]

I ll ask my dad to not send me money tomorrow . Hope INR will appreciate more in the coming weeks.

 

[deckingraj]

Hardly.

The US is not going to be fooled by such antics. Either India supports the American demands to isolate Iran economically or it doesn't. If India wants to do business with Iran, then it should stand proud and do so up front. These circuitous moves just make it look silly.

I know i have been talking to you on the same issue in another thread yet let me once again remind you that world has changed....Move out of this zero sum game attitude.....There are plenty of examples out there which can give you some insight into how international relations are managed....We are reducing our dependence on Iran's oil bcoz if push comes to shove then we need to be prepare for that...in the same token we also don't want to leave this market because of multiple reasons(no need to mention bcoz i know you know them...)...

 

[seethru]

India intends to keep importing oil from Iran and it appears that Indians, and even Chinese, will explore paying Tehran "with gold, the Japanese yen or even in part with their own national currencies", said a Pakistani daily.

An editorial in the News International on Monday said that the US wants Pakistan to drop the Iran-Pakistan gas pipeline project altogether.

"It has stepped up efforts to lobby Pakistan to abandon not only the IP gas pipeline project but also liquefied natural gas purchases from its western neighbour in return for cheaper gas from the US," the editorial added.

Earlier this month, US President Barack Obama signed into law new sanctions against Iran, a measure that also penalises foreign financial institutions that do business with Iran’s central bank, "as Pakistan will have to if it buys gas".

The editorial said: "On its part, India intends to keep importing oil from Iran."

"It draws some 12 percent of all its foreign crude from Iran, the second biggest exporter after Saudi Arabia. Moreover, as international sanctions tighten around corporations doing business with Iran, it appears the Indians, and even the Chinese, will explore paying Iran with gold, the Japanese yen or even in part with their own national currencies."

It went on to say that many are calling this another episode of the post-American world, "with regional powers attempting to unhinge bilateral trade ties off the US dollar and the euro".

The editorial said that Pakistan needs to draw a very clear distinction between UN sanctions and those imposed by the US.

"Pakistan is bearing heavy losses due to the energy crisis and needs to go ahead and explore all its options. It cannot be bullied into giving up on its own interests," it added.

Reports A Pakistani Daily

 

[rama]

India is barely a pawn in this big players game..India's only interest is the proxy route to central Asian thru Iran after the US pullout from Afghanistan as India is not gonna survive a day after 2014 in Afghanistan. US will go to any extent to protect its allies interest preferably ISRAEL and SAUDIS. they are not much interested in any dialogue with the Iranians and sooner or later they'll attack them with the help of Israel backed by Sunni Gulf states. Till now we have never heard a word from US spokesperson to cut down the oil imports from Iran to India. India's strict stand on its decision to continue oil imports will only pave the way to US to take military action against Iran and that's what Arab and Israel wants.
The other big players like China and Russia isn't doing anything, they can at least push the main parties to hold a dialogue to find a middle path to avert the destruction of this beautiful county Iran.

 

[Kaniska]

Hardly.

The US is not going to be fooled by such antics. Either India supports the American demands to isolate Iran economically or it doesn't. If India wants to do business with Iran, then it should stand proud and do so up front. These circuitous moves just make it look silly.

Dude....these matters are not a issue of being proud for India...Again we should mention that India s intrest to buy oil is not directed against standing up against US rather it is india's necessity that india has to diversify its oil sourcing from different place.

So in a nutsell we are not against US nor we want to hype that India is doing anything for Iran....This is purely necessity and intrest that matter....

Of course i know pak friends are feeling little but uncomfortable that how come a evil bharatis are looking after her own intrest first rather then US intrest.....beleive me....India wont allow to b$mb its own country by US like some of our neighour does it....