The exemptions of US sanctions on Iran’s oil industry given to India, China, South Korea, Taiwan, Italy, Greece and Turkey came to an end on 03 May 2019. The sanctions which were imposed on Iran in May 2018 were followed by the Trump’s withdrawal from Joint Comprehensive Plan of Action (JCPOA). The main intention of the sanctions which have a huge effect on Iran’s core areas is to deny the government of its revenue. But the main importers of Iran’s oil were given six-month waiver so that they could find an alternative source for importing oil. And now the waiver has come to an end. Three countries namely Taiwan, Greece and Italy have stopped buying the oil but the rest of the countries asked for the waivers to be extended. According to USA, countries that try to continue exporting from Iran are to face the sanctions.
As per India, after Iraq and Saudi Arabia, Iran is its largest source for importing oil. It also imports from Nigeria, UAE, Venezuela, Kuwait and others. On one side, India is also under pressure to cut oil imports from Venezuela. But Iran is one of its main suppliers. It also has cultural ties with Tehran so it will be difficult for India to stop at once the oil purchases. The Government of India has made its stance clear. It had stated that India’s foreign policy is not regulated according to the pressure from other countries and also mentioned that they abide to UN sanctions but no to the country specific sanctions.
Recently ExxonMobil, one of the world’s largest publicly-traded energy firms, announced that there might be more than five billion-equivalent barrels in the offshore Stabroek block in the South American country, Guyana. There is a growing interest in this country. India wants to move to these Guyana oil fields as it wants to bridge the supply gap as pressure from US increases to cut the oil purchases from Iran. But in Guyana, they are still looking at getting steady supplies and establishing term contracts for companies.
India gets its 10% of the oil imports from Iran because it has incentives and benefits like extended credit terms and low freight rates. And also Iranian oil is cheaper than oil from other sources. Taking into account, the growing fiscal deficit and rising fuel prices, India cannot completely cut off its purchases from Iran. But US National Security Advisor John Bolton had earlier stated that they would like to help the allies like India to find the substitute for Iranian oil.
In my view, sanctions serve a country’s interest but one cannot pressurize other counties to do the same. They make a huge impact on political, economic and cultural ties between the countries. They lead to the companies’ de-globalization of the targeted country. They lead the targeted country to grow poorer, reduced FDI’s and land the country in the instability in the long run.
Iran oil: US to end sanctions exemptions for major importers (22 April 2019) https://www.bbc.com/news/world-middle-east-48011496