Alice Wells, a senior US official who met her counterparts from the Ministry of External Affairs (MEA) and NITI Aayog this week, insisted that oil imports from Iran needed to be cut to zero to avoid sanctions, but assured that Indian investments in the Chabahar port could continue.

Wells, who held meetings in New Delhi on April 23-24 following the US government’s decision to withdraw the waiver to eight countries including India for oil import from Iran, also discussed investments in the defence sector, a government official told BusinessLine .

Investments to continue

On the Chabahar port being developed by India in Iran, Wells assured that the sanctions would not affect investments, the official added.

NITI Aayog Vice-Chairman Rajiv Kumar also participated in the discussions with Wells, who is the US Principal Deputy Assistant Secretary for South and Central Asia.

“Indian officials clarified that the country had substantially cut down on its oil imports from Iran over the last few months, but the US is insisting that it be brought down to zero,” the official said.

Although India may not want to officially declare that it would stop sourcing oil from Iran completely, the circumstances are such that it might not be logistically possible to continue imports, another official explained.

“The banks and financial institutions involved in the transactions in countries that continue to do trade with India may refuse to stay involved as they risk being blacklisted by the US. Shipping lines, too, would not want to be engaged in trade with Iran fearing sanctions,” the official said.

Even a bank like the UCO Bank, which operates the rupee-rial account for a barter-like trade between India and Iran, could get into trouble with the US if it continues to fund trade with Iran after the waiver expires on May 2, he pointed out.

In May 2018, Trump withdrew from a nuclear deal that the US and five other major world powers had struck with Iran in 2015 to curtail its nuclear programme. In November that year, Washington reimposed sanctions on exports of Iranian oil but granted waivers to some countries including India which will run out in a week.

Deals with UAE, Saudi

With India’s option to import oil from Iran snatched away, New Delhi now expects Washington to play a pro-active role in ensuring that the deals for imports that it strikes with suppliers like the UAE and Saudi Arabia for filling the gap would be favourable and not loaded against it. “The US has indicated that it would try and ensure that India continues to get access to reasonably-priced oil. To what extent this materialises remains to be seen,” the official said.

Meanwhile, reacting to US attempts to fill any gap in the global oil market created due to the sanctions through Saudi Arabia and the UAE, an Iranian Foreign Ministry spokesman said the country will not let any supplier replace its oil sales.

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