The country’s crude oil demand, not global pressures, will decide on whether its domestic refiners will continue to buy the fuel from Iran.

Talking to BusinessLine , Dharmendra Pradhan, Minister for Petroleum & Natural Gas, said, “There is no contradiction in our thinking on any issues. We will first ensure that our energy demands are met. Priority will be given to national interest.”

Iran is the third largest crude oil supplier to India after Iraq and Saudi Arabia. The global energy market is looking at how New Delhi will deal with the US President Donald Trump’s threat to impose economic sanctions on Iran.

“We will first look at our national interest. India’s energy basket has multiple sources now. Our focus will be to see that our requirement is not affected, and to ensure this, we will do what we have to do. But, we will also keep a watch on global geo-politics,” Pradhan said.

Pradhan’s confidence comes from the fact that in the global energy space where oil producers were agenda setters, large consumers like India have now gained voice as equals. This was also evident at the latest OPEC Forum meeting, where unlike in the past when the Indian delegation would just get a chance to meet junior officers of some of the key producing nations, this time around the key ministers of these countries, including Saudi Arabia, met the Indian team on the terms and time set by Indians.

Asked how India will manage its bilateral relations with the two countries — the US and Iran — as New Delhi’s decision will have a direct impact on the ties, Pradhan said, “The relations with both are distinct and we value our relations with them. But, you must consider this that those who are in the energy industry – whomsoever they may be – cannot ignore qualitative and assured market like India. Besides, we design our bilateral decisions accordingly.” On whether there has been some informal instructions to oil refiners on purchases from Iran or whether banks were shying away from extending credit to the refiners, the Minister reiterated: “National interest is paramount and even if there is any such indication, it will not be through media.”

Though November 4 is the deadline for US sanctions on Iran to kick in , the payment mechanism is already under pressure with banks expressing their concerns.

Volatile oil price

On volatility in global oil prices, Pradhan, who attended the OPEC Forum meeting last month, said, “We are pitching for a price band which is affordable and sustainable for both producers as well as consumers. And the producers acknowledge our argument positively.”

India has been putting across arguments on how pricing dynamics should work, he said adding that this is not restricted to OPEC alone. The price at which Indian refiners bought their crude oil this fiscal from April to July 5 was $72.83 a barrel while the full fiscal average for 2017-18 was $56.43 a barrel.

“Today, we are the third largest consumer in the world, but our per capita consumption is very low. It is going to increase...there needs to be a clarity on price. Affordability is key for all reforms we have undertaken such as market deregulation and energy accessibility, through schemes like Ujjwala and Saubhagya,” he said. And that is why India is talking about price bandwidth, he added.

“We are never saying low price as we know low price means that investment will be low in exploration and production (E&P). Low investment in E&P will mean tomorrow prices will be higher because of scarcity. So we want sustainability,” he said.

In fact, it’s not only consumers like India that are feeling the pinch. The US President Donald Trump had tweeted: “The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!”