India is buying more US and Saudi oil because of sanctions on Iran

Posted at 10:48 AM, Jun 26, 2019
and last updated 2019-06-27 08:24:54-04

US sanctions have forced a leading purchaser of Iranian crude exports to buy more oil from Saudi Arabia and the United States.

Sanjiv Singh, head of state-run refiner Indian Oil Corporation, told CNN Business that “whatever supplies were coming from Iran, they were well distributed amongst other countries.”

Iran had been the third largest supplier of crude to India, which imports huge amounts of energy to fuel its growing economy. Iraq and Saudi Arabia were the only countries to export more to India.

But India was forced to turn to other sources after the Trump administration imposed sanctions on Iranian oil exports.

India was one of only eight countries granted a waiver that allowed it to keep buying oil from Tehran, but that reprieve expired on May 2.

While India had said it would only recognize sanctions imposed by the United Nations, the country’s petroleum ministersaid in April that it would source “additional supplies from other major oil producing countries.”

A spokesperson for India’s Ministry of Petroleum and Natural Gas confirmed to CNN Business on Wednesday that the country has now ceased all imports of oil from Iran.

Singh said on Wednesday that Indian Oil “wanted as many suppliers as possible” and that cutting off Iranian oil was a “collective decision” made with input from the government.

“I’m sure it was in the interest of the country at the moment,” he added.

Relations between India and the United States have soured recently over trade, and New Delhi is likely to be wary about further upsetting its biggest export market.

Other countries including Turkey have reportedly stopped oil imports from Iran, but the world’s biggest buyer, China, is ignoring the US sanctions.

China, which is engaged in a trade war with America, purchased $585 million worth of crude from Iran in May, according to Iran’s semi-official Tasnim news agency, and Tehran expects to export even more to China in June.

US Secretary of State Mike Pompeo, who is currently on a visit to India, said the sanctions were aimed at countering what he called Iran’s “terror regime.”

“I think there is a shared understanding of threat and a common purpose to ensure to keep energy at the right price and deter this threat,” he told reporters in New Delhi on Wednesday.

India’s foreign minister Subrahmanyam Jaishankar said that Pompeo was “very receptive” to India’s concerns about global energy supplies.

“He understands that this is today the world’s fifth largest economy, which imports 85% of its energy … he gets what our interests are,” Jaishankar added.

Singh said India is likely to become more even reliant on other countries for its energy needs.