New Delhi (Sputnik): Indian energy experts believe oil imports sans Iranian oil would drive up oil purchase costs for India. The US Trump administration has announced an end to the waiver of sanctions that was accorded to some countries including India to enable them to meet their energy needs through Iranian oil imports.
Sputnik talked with Amit Bhandari from Indian Council of Global Relations (Gateway House) on various issues pertaining to sanctions against Iranian oil import and the scenarios that this is likely to throw up.
Sputnik: How will the removal of the US waiver on Iran Oil Import is likely to pan out?
Sputnik: What would be India's immediate alternatives?
Amit Bhandari: Oil is fungible commodity. India has other options to buy oil. India imports about 4 million barrels of oil per day and less than 10% of this comes from Iran. It is not that we are going to pay a higher price for just this 10%. Instead, the crude price increase will apply on our total oil imports.
Sputnik: Is such a sanctions regime sustainable keeping in view that large buyers are economic powerhouses themselves?
Amit Bhandari: Most of the large economies have large US operations also. It's not that oil is bought by governments, the ones buying oil are corporations. These corporations have sizeable exposure in US also. They need funding. They need reserves and have to have forex as working capital to meet their business needs. Each of these oil buying companies have to work out for themselves whether they can afford to be caught on the wrong side of US sanctions. I do not think there are corporations that would like to be caught in the sanctions cross-fire.
Amit Bhandari: The US has categorically decided to levy economic sanctions Iran. Each country has to weigh its own options. Large economies, in my opinion, cannot afford to overlook the largest global economy which is the US as of now.
Sputnik: Will this give a push for de-dollarization?
Amit Bhandari: Well, I am not entirely convinced. The world's economy is too interlinked for the US sanctions against Iran to push the world economy towards de-dollarization. Look, what are the other options available. Let's take Euro. It is a very creditworthy currency. But let's not forget, it has substantial footprint in the US markets as well. On the other hand, Chinese currency has trust issues vis-a-vis many countries. As of now the dollar will survive.
The views expressed in this article are those of the speaker and do not necessarily reflect those of Sputnik.