India among the eight countries allowed to continue buying oil from Iran even after the US reimposes sanctions — But there’s a catch

• The United States will reimpose sanctions on Iran come November 5 but will exempt eight countries, including India, from the penalty.
• That being said, the waiver is only temporary with the aim of stabilizing global oil prices.
• While the pressure campaign may be reduced Iran oil exports, India is importing more oil from the OPEC nation now as compared to 2011 levels.

The sanctions imposed by the United States may be hard on India’s current account deficit, but at least the pressure to find an alternate crude oil supplier has been eased. The United States has agreed to let India, as well as seven other countries, continue to buy oil from Iran even after it reimposes sanctions on November 5.

And while that may be true, it’s only temporary. So, essentially, it should be treated as an extension to the deadline that’s already been placed.

This is good news for the rising petrol and diesel prices in India. Since the sanctions hit, taxi drivers, rickshaw operators and even petrol pumps have gone on strike to protest the sudden inflation.

A senior administration official in the know stated that it was important to do so international oil prices don’t inflate even further. He added that the Michael Pompeo, the United States Secretary of State, will be confirming the waivers and the number of exemptions later this week.

While four countries have been identified — India, China, Japan and South Korea — the other four are yet to be disclosed.

United States’ pressure campaign

The aim of the United States is to cut off Iran’s revenue stream from trade entirely. So, while oil is their main export, President Donald Trump is also asking countries to reduce trading in other goods as well, that aren’t covered by the sanctions.

So far the pressure campaign against Iran has managed to drive down their oil exports from 2.7 million barrels a month to 1.6 million barrels a month.

That being said, India’s imports from Iran have increased to 800,000 barrels a day as of July 2018, which is well above the levels of 2011.

But, change is on the way with the primary players in the oil sector, like Reliance Limited and the Indian Oil Corporation Limited, looking to pull out. They say that efforts to stay engaged with Iran are getting more complicated and transactions will have to cease. The impact can be observed with Iranian oil imports have already reducing between July and August.

Experts speculate that cutting oil imports from Iran might not be so easy for India as the world third-largest oil importer and the second-largest buyer of crude oil from India.