Obama administration officials say they are concernedIndiamay run afoul of a newUSlaw restricting payments for Iranian oil, forcing the White House to impose sanctions on one of its most important allies inAsia.
So far this year,Indiais failing to cut back its purchases of Iranian oil, which may force President Barack Obama to impose penalties as early as June 28, according to severalUSofficials.
TheUSlaw, which targets oil payments made throughIran’s central bank, applies in any country that doesn’t make a “significant” reduction in its Iranian crude oil purchases during the first half of this year. IfIndiafails to sufficiently cut Iranian imports, Obama may be compelled to bar access to theUSbanking system for any Indian bank processing oil payments throughIran’s central bank, theUSofficials said.
WhileIndiahasn’t asked its refiners to stop purchasing Iranian crude, the government has told processors in theIndiato seek alternate supplies and gradually reduce their dependence on theIrandue to increasing pressure from theUSin recent weeks, three Indian officials with direct knowledge of the situation said.
Indiahasn’t significantly cut imports this year because refiners’ annual crude term deals withIrantypically run from April to March, they said. The planned reductions will start only when new annual contracts begin next month, the Indian officials said, declining to be identified.
“Given the level of trade, and in particular oil, between Iran and India, targeting an Indian entity that facilitates Iran’s access to the international financial market should be top of mind for the US Treasury,” Avi Jorisch, a former Treasury Department official who is now a Washington-based consultant on deterring illicit finance, said.
Indiabought an average of 328,000 barrels a day of Iranian crude in the first six months of last year, making it the third largest buyer, behindChinaandJapanand ahead ofSouth Korea, according to the US Energy Information Administration.
TheUSgovernment may not be aware thatIndia’s biggest buyer of Iranian oil, state-owned Mangalore Refinery & Petrochemicals (MRPL), plans to import less fromIranstarting next month, according to two officials with direct knowledge of the matter.
Oil minister S Jaipal Reddy, finance minister Pranab Mukherjee and foreign secretary Ranjan Mathai have said India will continue to buy Iranian oil to meet its growing energy needs.
While, the Indian government has an excellent record of enforcing United Nations sanctions onIran,Indiahas objected to unilateralUSsanctions, according to US officials.
“We abide scrupulously by UN authorized sanctions,” Indian foreign ministry spokesman Syed Akbaruddin said. While, restrictions imposed by individual countries “have an impact on commercial interactions, from a legal perspective there is nothing that binds us to follow them.”