India, Iran discuss possible impact of US sanctions on bilateral oil trade

India and Iran today deliberated on ways to deal with the possible impact on oil trade between the two countries due to the US sanctions on import of Iranian petroleum products.

The issue figured during 15th round of Foreign Office Consultations between the two countries during which a host of other issues including implementation of Chabahar port project also figured, official sources said.

While Foreign Secretary Vijay Gokhale led the Indian delegation, the Iranian side was headed by Deputy Foreign Minister Seyyed Abbas Araghchi.

"Views were also exchanged on regional and international issues of mutual interest, including the efforts being made by various parties to address issues that have arisen over the Joint Comprehensive Plan of Action (JCPOA)," the Ministry of External Affairs (MEA) said without elaborating.

The ministry said it was agreed to maintain the momentum of mutually beneficial multi-faceted bilateral cooperation and exchanges between the two sides and to hold the next round of Joint Commission Meeting at the level of External Affairs Ministers in November in Iran.

In 2015, Iran had struck the JCPOA deal with the US, the UK, Russia, China, France and Germany under which Tehran had agreed to limit its sensitive nuclear activities in return for lifting of crippling economic sanctions.

However, the Trump administration pulled out of the deal in May and brought back economic sanctions against Tehran.

The US has told India and other countries to cut oil imports from the Gulf nation to "zero" by November 4 or face sanctions. India is yet to take a call on complying with the US sanctions on Iran.

In today's meeting, India told the Iranian side that it was yet to take a call on complying with the US sanctions.

The Iranian deputy foreign minister conveyed to the Indian side that his country has been a reliable energy partner for New Delhi and it should remain so, sources said.

A delegation from the US is arriving here tomorrow as part of the Trump administration's efforts to engage with major powers on the Iranian issue.

Iran is India's third-largest oil supplier after Iraq and Saudi Arabia. Iran supplied 18.4 million tonnes of crude oil between April 2017 and January 2018 (first 10 months of fiscal 2017-18).

Sources said India may request the US to consider providing it some waiver from the sanctions on import of Iranian oil.

They said India is looking at the possibility of falling back on the rupee-rial arrangement for importing oil from Iran in the wake of US sanctions.

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.

The first set of US sanctions on Iran will start from August 6 and second set will begin from November 4.

Last week, Iranian Embassy had said that Iran will do its best to ensure security of oil supply to India by offering various flexible measures.

The MEA said both sides "reviewed and positively assessed" the progress in implementation of decisions taken during the state visit Iranian President to India in February 2018, especially for enhancing connectivity and strengthening cooperation in trade and economic issues.

Araghchi also called on the Minister of State for External Affairs M J Akbar.

Last week, Iran's Deputy Ambassador and Charge d'Affaires Massoud Rezvanian Rahaghi, during an address at an event, cautioned New Delhi that it will stand to lose "special privileges" if it cuts import of Iranian oil following US sanctions.

However, a day later, the Iranian embassy issued a statement, clarifying that Tehran will do its best to ensure security of oil supply to India.