New Delhi: With China’s relations with US going sour, there seems to be some relief to India to continue its relations with Iran after the US imposed sanctions over Iranian oil imports with effective from November 4.
With China’s main oil importer Unipec had suspended US shipments earlier this month triggered a buzz that China intended to slap duty on US in retaliation, TOI reported
Now this situation between US and China seems to work well for India since US imposed sanctions on Iranian Oil imports.
Speaking of which, executives familiar with China and US’s situation say it is highly unlikely that China resumes to buy US oil anytime soon.
“It takes two months for tankers to reach China from the US. Shipments would be fraught with the risk of being hit by tariffs if they are imposed in between,” said an executive.
India is the second biggest importer of Iranian oil with China being Iran’s first customer along with being the largest buyer of US crude in Asia.
“If China is not buying US crude then that leaves India, with 5-6% annual demand growth and ability to process a wide variety of crudes, as the only major Asian buyer with capacity to absorb the supplies shunned by the Chinese. Other Asian buyers — South Korea, Taiwan and Thailand — may not be able to accommodate much extra US oil,” he said.
“By making US crude a bargaining chip, China has also indicated its intention to keep buying Iranian oil, though there are reports Beijing will not ramp up shipments from Iran. This means Iranian oil will be in the market, which will help keep oil prices range-bound,” he further added.
This will give India leverage for either a waiver or to continue importing Iranian Oil under the Obama sanctions which made oil trading in rupees.
Obama had then granted waiver to India after his administration imposed sanctions to curb Iran’s nuclear programme and India reduced Iran oil imports which led Iran to drop to seventh position after it reached the first position beating Saudi Arabia after seven long years.