Indian oil refineries are expressing fear over blockage of crude oil exports from Iran over a $ 5 billion payment dispute after Tehran warned that they would halt shipments if India did not pay up. However, Iranian Mehr news agency quoted an official saying that no final decision has been taken yet over the payment dispute. About 12 percent of crude oil imports of India are at the mercy of Iran, the largest after China. Nevertheless, the country has been under pressure for more than six months as it has not been able to pay Tehran due to the imposed international banking sanctions on the Islamic Republic over its nuclear stance. Iran had previously warned that if the six-month long dispute were not resolved at it earliest, it would stop exporting oil from August 1, 2011.
Although the final decision has not been officially announced, Essar Oil is expecting the last nail in the coffin, as they have received no intimation of allocation from National Iranian Oil Co. (NIOC), suggesting no oil will be coming from Iran next month. Essar Oil imports 36 million barrels of oil a year from Iran. The company was anticipating this cut and is looking for oil supplies from countries in the Middle East. State-run Hindustan Petroleum Corporation Ltd (HPCL) also confirmed they were anticipating the stoppage. Oil companies are targeting countries like Saudi Arabia and UAE to suffice the county's oil supply targets.
The managing director of the National Iranian Oil Company, Mohsen Ghamsari has said that if the problem of transferring of money was not resolved, the decision of stopping oil supplies will be taken. Since December 2010, Iran has been pressuring India to pay its bills for the 400,000 barrels per day (bpd) it buys from the Islamic state. However, oil companies are finding ways to resolve a deadlock caused by RBI's stance on regional clearing mechanism. Germany had allowed India to disburse its bills through Hamburg-based EIH bank, which handles trade for Iranian companies.
After discussions with German Chancellor Angela Merkel, the decision was backtracked and since EIH has come under EU sanctions. Iran said that Saudi Arabia or any other Middle East country would be unable to sustain India's demand for crude oil imports, which would be possible only if they grant considerable discount. India's decision to change oil supplier would cause economic and technical problems for the country, said Iran. Earlier Iran had warned Saudi Arabia of an oil price war caused by increase in the Mid-East country's increased oil output combined with price cuts. Analysts said the move by Iran to stop oil exports to India would not see a significant impact on the oil prices. If fact the prices on oil would be positively supported by this move rather than a negative impact.
Although the final decision has not been officially announced, Essar Oil is expecting the last nail in the coffin, as they have received no intimation of allocation from National Iranian Oil Co. (NIOC), suggesting no oil will be coming from Iran next month. Essar Oil imports 36 million barrels of oil a year from Iran. The company was anticipating this cut and is looking for oil supplies from countries in the Middle East. State-run Hindustan Petroleum Corporation Ltd (HPCL) also confirmed they were anticipating the stoppage. Oil companies are targeting countries like Saudi Arabia and UAE to suffice the county's oil supply targets.
The managing director of the National Iranian Oil Company, Mohsen Ghamsari has said that if the problem of transferring of money was not resolved, the decision of stopping oil supplies will be taken. Since December 2010, Iran has been pressuring India to pay its bills for the 400,000 barrels per day (bpd) it buys from the Islamic state. However, oil companies are finding ways to resolve a deadlock caused by RBI's stance on regional clearing mechanism. Germany had allowed India to disburse its bills through Hamburg-based EIH bank, which handles trade for Iranian companies.
After discussions with German Chancellor Angela Merkel, the decision was backtracked and since EIH has come under EU sanctions. Iran said that Saudi Arabia or any other Middle East country would be unable to sustain India's demand for crude oil imports, which would be possible only if they grant considerable discount. India's decision to change oil supplier would cause economic and technical problems for the country, said Iran. Earlier Iran had warned Saudi Arabia of an oil price war caused by increase in the Mid-East country's increased oil output combined with price cuts. Analysts said the move by Iran to stop oil exports to India would not see a significant impact on the oil prices. If fact the prices on oil would be positively supported by this move rather than a negative impact.
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