Enough oil in market to shun Iran, says Obama

Enough oil in market to shun Iran, says Obama

But New Delhi remains unimpressed

US President Barack Obama on Saturday asserted that global supplies of petroleum and petroleum products would remain steady even after the embargo on Iranian supplies comes into force in July.

The assertion came four days after India and China voiced their concern over an American-led move to bar crude oil imports from Iran. On Wednesday, the two Asian countries and their Russian, Brazilian and South African partners in the BRICS bloc had rejected at their New Delhi meeting the American move to bar Iranian oil exports from July this year, asserting that such a move would push up oil prices and slow their economic growth.

Obama’s assurances did not impress India. “There is nothing new in President Obama’s assurances,” an Indian official said in New Delhi, reiterating that India would only adhere to sanctions imposed by the United Nations, and not by the US under its domestic laws.

BRICS meet

This position was also articulated by the five BRICS nations at their meeting in New Delhi earlier this week.

“I will closely monitor this situation (regarding oil supplies) to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran,” Obama said in Washington as he went ahead and formally made a Presidential Determination to go ahead with the decision to block Iranian oil supplies from July.

“I determine...that there is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions,” Obama said.

Such a Determination – as mandated by a Congressional legislation – is primarily aimed at slashing Iran’s oil revenue so as to force it to abandon its nuclear ambition.

Twelve countries – including India, China, Turkey and South Korea – have time till the end of June to show that they have significantly reduced their dependence on Iranian oil.
The US has already exempted 11 countries from these sanctions and more countries could be exempted soon.

A senior Administration official said the Obama Administration was working with India and China on to reduce their dependence on Iranian oil. The US and EU countries have taken recourse to banning Iranian oil imports to force Tehran to return to the negotiating table and persuade its leadership the country’s widely suspected nuclear weapons programme. “We will continue to talk to the Indians, the Chinese and other countries about tightening that squeeze on the Iranian government,” the official said.

India and China are important for the success of the American-led move against Tehran as over 30 per cent of the Iranian crude exports are to the two countries – India accounting for 11 per cent and China 20 per cent. .

The US has obliquely suggested that it could impose sanctions on India if it did not cut its crude imports from Iran. Mangalore-based MRPL is Iran's top Indian client. It sources about three-fifths of its crude requirements from Tehran. The company has planned to reduce its dependence on Iranian oil in the coming months.