India could be on a collision course with the United States and European Union after officials in Delhi made clear they intended to carry on importing oil from Iran, despite the imposition of Western sanctions against Tehran.
S Jaipal Reddy, India’s Oil Minister, said yesterday that the country was still considering how best to make payments for the $12bn of crude oil it annually imports from Iran, and which it pays for using a Turkish bank as an intermediary. Delhi is concerned that the US will seek to persuade Turkey to block this option as the West steps up pressure on Iran.
Drawing a very clear distinction between UN sanctions and those imposed by the US, Mr Reddy told reporters: “We will scrupulously adhere to the sanctions imposed by the UN. No less, no more. We will continue to explore various options of payment to Iran. As of now, supplies are on and Iran has been very positive and we are still optimistic.”
A team of Indian experts recently visited Tehran to assess the best way to continue to make payments. Unconfirmed reports suggest the options include the rupee, which is only partly convertible, and the Japanese yen. One report suggested India would pay for the oil using gold. Mr Reddy declined to comment on the outcome of the discussions. “We cannot disclose such things,” he said.
The US and EU, which accuse Iran of trying to develop a nuclear weapon – an accusation that Iran stridently denies – are seeking various ways to put pressure on the government in Tehran. EU foreign ministers this week agreed to a ban on oil imports from Iran as of 1 July.
India has no intention of following suit. The country is hungry for energy, with an economy growing at more than 7 per cent. The AFP news agency reports that India buys 12 per cent of its oil from Iran, which is its second largest supplier after Saudi Arabia.
China is the Islamic Republic’s largest customer, accounting for around 20 per cent of its exports, and has already made clear it has no plan to alter this arrangement. Last year, as the issue of sanctions emerged, there were reports India may seek to barter for the oil, offering steel, electronic goods and food in exchange.