India to Cut Oil Imports from Iran by 'Half'

Bloomberg reported on Wednesday, August 14, citing informed sources, that India is considering a 50% reduction in oil imports from Iran to obtain exemptions from U.S. sanctions. According to the report, U.S. officials have had intensive negotiations with India over the past month, and the Delhi government has stated that due to competitive prices offered by Iran for oil, Indian refineries cannot completely halt purchases of Iranian oil. Bloomberg writes that India intends to inform the Washington government of its final decision next month. U.S. oil sanctions against Iran are set to begin in November of this year, about three months from now. Previously, reports had emerged regarding Iran's discounts for oil exports to Asia, a three-month grace period for oil payment, as well as free oil transfers to the ports of customer countries. When the U.S. first withdrew from the JCPOA, it stated its intention to reduce Iran's oil exports to zero, which means a daily reduction of 2.1 million barrels in Iran's oil production and exports. However, it later announced that it would grant exemptions to some customers if they significantly reduced their purchases of Iranian oil. Bloomberg notes that the U.S. has successfully brought Japan and South Korea on board, but China and India say they are unable to completely cut off their purchases of Iranian oil. 'Thus, the U.S. has proposed a 50% reduction in Iranian oil purchases to them.' The report adds that the Trump administration has faced resistance in rallying the European Union for sanctions against Iranian oil. The EU has called for case-by-case exemptions on this issue, as even a reduction in oil purchases by the EU could destabilize Iran's economy. The EU, along with Turkey, imported about 700,000 barrels of oil and gas condensate from Iran daily during the first six months of this year. Asian customers also had 1.7 million barrels of oil imports from the Islamic Republic. Bloomberg states that Iran's oil exports in India's last fiscal year, which approximately coincides with Iran's solar year, were about 27.2 million tons, which it aims to reduce to 22.6 million tons for the current fiscal year. The previous year (1395), India's oil purchases from Iran were 11 million tons. India purchased 597,000 barrels per day of oil from Iran in the first half of this year, equivalent to about 14.7 million tons. On Tuesday of this week, OPEC reported that Iran's daily oil production had decreased by more than 85,000 barrels since the U.S. withdrawal from the JCPOA until last month.