Rocked by Trump's Sanctions, Iranian Oil Exports Drops Further

After going ahead with the S-400 missile deal with Russian Federation despite the United States threat of sanctions, reports now suggest that India may continue buying oil from Iran even after the sectoral sanction imposed by the U.S. begin on November 4.

India's move marks the second time in recent weeks New Delhi has disregarded the Trump administration's threat of sanctions.

In May, Trump pulled the U.S. out of the Iran nuclear deal despite objection from the other signatories, the UK, Russia, Germany, China, and France, re-imposing sanctions lifted under the deal. The industry has been worrying that an entirely effective ban on Iranian oil exports would strain supplies.

India had planned to import about 25 MT of crude oil from Iran in 2018-19, up from 22.6 MT imported in 2017-18.

Union Petroleum Minister Dharmendra Pradhan on Monday said Indian companies will continue to import crude oil from Iran next month despite United States' sanctions on Tehran coming into force from November 4.

But Iran, OPEC's third-largest producer, has repeatedly said that its oil exports can not be reduced to zero because of high demand levels in the market and has blamed Trump for an oil price rally caused by imposing sanctions on Tehran.

India, Iran's No.2 oil client behind China, does not recognise the USA sanctions. "Notwithstanding the present demand momentum, we have downgraded our 2019 USA growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation".

Keeping oil in bonded storage gives the shipment owner the option to sell into China or to other buyers in the region, Reuters news agency reported. The announcement, the first indication Washington was considering such waivers, followed a Reuters report that India planned to lift some Iranian oil in November although it has been cutting back on Iranian imports recent months.

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"We will be guided by our national interest", he added.

"In particular, both India and China continued to import crude from Iran, even though they had to cut down volumes significantly".

India had diversified its oil supplies to cushion the impact of sanctions, he said. The next set of sanctions is due to be re-imposed on November 4 that will target Iran's oil sector.

Concern that the U.S.

US Secretary of State Mike Pompeo understood the challenging position India are in.

He said: "We have to fulfil all our domestic requirements". Washington said on Friday it was considering waivers for nations that were reducing imports of Iranian oil.

Soaring crude oil prices have been a huge burden for the Indian consumer and have brought the taxation structure and margins of oil marketing companies under the scanner leading to mass criticism.

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