Sources said India is exploring the possibility of reviving the rupee-rial arrangement for importing oil from Iran in the wake of US sanctions.
Days after US envoy to the UN Nikki Haley said that India should snap trade ties with Iran, the US is likely to reach out to the Indian government in the next one month over the issue of sanctions on Iran and its impact on Delhi’s engagement with Iran, sources said here on Wednesday.
The first set of US sanctions on Iran will start from August 6 and second set will begin from November 4. Sources said the US was prepared to work with countries that are reducing their oil imports on a case-to-case basis. Sources said India is exploring the possibility of reviving the rupee-rial arrangement for importing oil from Iran in the wake of US sanctions.
“In the next few weeks, we expect to have some engagements on the issue with the US. We cannot pre-judge what the US will be doing,” said a source. India is also expected to convey to the US the importance of the Chabahar port project considering the strategic nature of the project — as it provides access to conflict-ridden Afghanistan bypassing Pakistan.
Informal indication from Washington DC has been that the Trump administration understands India’s reasoning on the Chabahar port, that may be kept out of the sanctions regime. Shipping to Iran and ports in the country are also coming under the US sanctions.
The US has told India and other countries to cut oil imports from Iran to “zero” by November 4 or face sanctions, making it clear that there would be no waivers to anyone. Sources said there was no doubt that the US was going to put pressure on India and other countries which import oil from Iran, noting, “the question is what do we see as a national interest and how do we explain our case to the US. That is still to be done.”
The rupee-rial arrangement was used to buy oil from Iran before sanctions were lifted against it three years ago.
Under the mechanism, India used to pay in Euros to clear 55 per cent of its dues through Ankara-based Halk bank. The remaining 45 per cent payment was remitted in rupees in accounts Iranian oil companies had with the UCO Bank.
According to sources, External Affairs Minister Sushma Swaraj had not given any assurance to her Iranian counterpart Mohammad Javad Zarif about oil import from Iran when they held talks here in May. They also said the Petroleum Ministry has not decided on cutting oil import from Iran. Iran is India’s third-largest oil supplier after Iraq and Saudi Arabia.
Separately, sources also said that the US postponed the ‘2+2 dialogue’ with India as Secretary of State Michael R Pompeo has to travel to North Korea to discuss the country’s denuclearisation plan. The reason for postponing the dialogue, scheduled for July 6 in Washington, was conveyed to External Affairs Minister Sushma Swaraj by Pompeo during a telephonic conversation between them on June 27, sources said. However, it could not be divulged owing to the sensitive nature of Pompeo’s visit.