From UPSC perspective, the following things are important :
Prelims level : India's oil imports
Mains level : Heated US-Iran relation and its impact of India
- The U.S. has decided that it will not renew exemptions from its sanctions for importing oil from Iran.
Penalty for Indian Imports
- The US will not issue any additional Significant Reduction Exceptions [SREs] to existing importers of Iranian oil.
- US has continued to apply maximum pressure on the Iranian regime until its leaders change their destructive behaviour, respect the rights of the Iranian people, and return to the negotiating table.
- India, China and U.S. allies Japan, South Korea and Turkey will be the most impacted by the non-renewal of waivers.
- The other three currently exempted countries — Italy, Greece and Taiwan — have already reduced their imports to zero.
Implications for India
- India is the second biggest buyer of Iranian oil after China.
- It is being pushed by the US to restrict its monthly purchase to 1.25 million tonnes or 15 million tonnes in a year down from 22.6 million tonnes in 2017-18 financial year.
- Even during the last set of sanctions between 2012 and 2015, India had continued to import oil from Iran.
- The US decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue.
- Apart from oil imports, India will also have to navigate a waiver for development of the Chabahar port which is of critical strategic importance.
About India’s Oil Import
- India is the world’s third-largest consumer of oil.
- With 85 per cent of its crude oil and 34 per cent of its natural gas requirements is being fulfilled by imports.
- In 2016, India imported 215 million tonnes of crude oil and at 13 per cent, Iran stood third among India’s biggest oil suppliers, after Saudi Arabia and Iraq at 18 per cent each.