WASHINGTON, May 2, (Agencies): US sanctions on Iran could boost oil prices and inflation to a point that hurts the common person in India, the country’s ambassador to the United States said on Tuesday, after the Trump administration said it would end waivers for Iran’s oil buyers. President Donald Trump’s efforts to sink Iran’s oil exports to zero will have a direct impact on India, the largest buyer of the oil after China, Harsh Vardhan Shringla, the ambassador, said at a Carnegie Endowment event.
“We are apprehensive that that impact can translate into infl ation, (and) higher oil prices,” that could affect the common person in India, Shringla said. Trump’s sanctions on Iran are intended to curb its nuclear and ballistic missile program and reduce its influence in Syria, Yemen and other countries in the Middle East. Many of India’s oil refineries are calibrated to process crude oil from Iran and “it is not possible to suddenly convert those refineries (to run )some other form of crude,” Shringla said.
Cutting off sales of oil from Iran, with which India has long had business and cultural relations, raises questions about longterm agreements on pricing and quality in the oil business, he said.
The Trump administration surprised Iran’s oil customers, including India, China and Turkey, last week by saying no waivers on the sanctions would be granted after May 1, ending six months of exceptions to the sanctions for reductions in purchases.
Trump reimposed the sanctions last year after removing Washington from a 2015 international pact with Tehran designed to curb its nuclear program. India’s Petroleum and Natural Gas Minister Dharmendra Pradhan said last week that India will get additional supplies from other major oil-producing countries to compensate for the loss of Iranian crude. But US-based critics of Trump’s sanctions have said that over the long term even US allies will tire of having to comply with the measures and that smuggling of the oil could eventually rise.
Shringla, who became ambassador in January after a diplomatic career of 35 years, said India understands Washington has issues with Iran. But excessive use of sanctions can at a certain stage become counterproductive, especially when administered by one country alone, and “affect friend and foe alike,” he said.
Turkey will be unable to diversify oil imports quickly after the United States ended waivers on purchases from Iran, the Turkish foreign minister said on Thursday, a day after a US-imposed sanctions deadline. The United States demanded on April 22 that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers that had allowed Iran’s eight biggest customers, including Turkey, to import limited volumes.
While Turkey has managed a gradual shift away from its heavily reliance on Iranian crude over the past year, Turkish Foreign Minister Mevlut Cavusoglu said its refineries are not suitable for the oil of some other countries. “It does not seem possible for us to diversify the sources of the oil we import in a short time,” he said at a news conference, adding that Washington should review its decision.
“We have to renew the technology of our refineries when we buy oil from third countries. That would mean the refineries remaining shut for some time. This, of course, has a cost.” The White House has said it was working with top oil exporters Saudi Arabia and the United Arab Emirates to ensure the market was “adequately supplied”. Turkish imports from Iran have dropped gradually since last May, when the United States first mentioned possible sanctions.