India: Import of Crude from Iran and Chabahar Port Development

The sanctions waiver from the US has curtailed the Indian crude imports from Iran. But the fact that Iran was an important supplier of crude to India cannot be sidelined because:

  • Iran is India’s third-largest oil supplier behind Iraq and Saudi Arabia.
  • Iran was the second largest after Saudi Arabia until 2010-11. But the sanctions moved it to the seventh spot in subsequent years.
  • With the supplies of 27.2 million tonnes, Iran again became the third largest supplier in 2016-17.

The US decision to end waivers for countries importing crude from Iran is bound to hurt India’s interests, as it will have to look for alternative sources.

Chabahar Port Development

The sole reprieve for India is that the US has not put sanctions on Chabahar port development. This is due to the fact that it provides an alternative root for Afghanistan.

Afghanistan is a landlocked country. Together with providing access to Afghanistan, Chabahar port can also be the Indian gateway to central Asia which is inaccessible to India directly.

Even though US has walked out of the Joint comprehensive plan of action (JCPOA) other partners ”especially the EU and the three major European countries UK, Germany and France have expressed their commitments to go ahead with the agreement. If the practical hurdles on the effective implementation of the European Union’s alternative payment mechanism are rectified, it would provide a further respite to India in further strengthening the bilateral relations with Iran.

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