Reuters reports India allows state refiners to use Iran tankers, insurance for oil imports.
>India is allowing state refiners to import Iranian oil with Tehran arranging tankers and insurance after firms including the country’s top shipper Shipping Corp of India (SCI) halted voyages to Iran due to U.S. sanctions, sources said.
>New Delhi’s attempt to keep Iranian oil flowing mirrors a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co (NITC).
>The moves by the two top buyers of Iranian crude indicate that the Islamic Republic may not be fully cut off from global oil markets from November, when U.S. sanctions against Tehran’s petroleum sector are due to start.
>New Delhi turned to the NITC fleet after most insurers and reinsurers had begun winding down services for Iran, wanting to avoid falling foul of the sanctions given their large exposure to the United States.
>Under a CIF arrangement, Iran would provide shipping and insurance, enabling Indian refiners to continue purchases of the country’s oil despite the non-availability of cover from Western insurers due to the restrictions imposed by Washington.
>The move would benefit Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and MRPL, which plan to lift Iranian cargoes during the rest of the fiscal year ending on March 31.
>India wants to continue buying oil from OPEC member Iran as Tehran is offering almost free shipping and an extended credit period.
>State refiners, which drove India’s July imports of Iranian oil to a record 768,000 barrels per day, had planned to nearly double oil imports from Iran in 2018/19.
Free Shipping
This is a great deal for India and Iran.
If the EU accepted a similar deal, Trump’s sanctions would crumble on the spot, and that would be the end of it (other than the resultant massive howls and threats).
Potential Escalation
Assuming the EU displays no backbone (which is highly likely), it’s not too difficult to see potential for a major escalation.
The US could stop Iranian tankers on the open seas or perhaps even sink one, or threaten to sink one, an open act or war. Of course sanctions are an act or war in and of themselves.
There is a possibility China or Russia might come to the defense of Iran, but they have their own problems with tariffs and sanctions respectively.
India could offer military protection.
All of these ideas may have a small likelihood, but the cumulative risk of a major accident is well above zero.
Absurd Setup
Meanwhile, until the sanctions are broken, we remain in the 100% absurd setup where one person gets to set sanction policy for the entire world.
Mike “Mish” Shedlock
US was very friendly to Iran when it controlled their oil. Now it is trying to bully others. How long will that work in a WORLD RUN by dictators. Just look from Syria, Putin’s russia, China – a Xi 100% control, N-korea, Japan with 200% debt/gdp – owned by their bankers, Iraq, Iran, Saudia Arabia – A big chunk of Africa.
India on the other hand is the counterweight to China, is a nuclear power with a competent Navy with home bases in Indian ocean. In 1971 Kissinger sent an aircraft carrier and India rushed to conclude. In 2019, US should not beard the lion its own den. India can take anything under Nuclear bomb – does US have the guts to Hiroshima now? Anything under that – US loss of sanctions power will and is already a huge loss of face for USA in China.
Is US really Uber-powerful? US$ as reserve currency will give way to a multi-lateral currency. US Armies are good at shock-and-awe but Vietnam showed kill a few US soldiers and there is little willpower to “OCCUPY” – see what happened in Iraq. Sanctions if unilateral and arbitrary will hasten use of NON-US-BANKS maybe non-EU banks. China and Russia don’t really care about US$ and US Banks. Freeze assets enough and foreign rich will seek other avenues.
Modi doesn’t care about H-1B visas (because they don’t vote). He cares about food price inflation. Transportation is a major component of food price inflation. Modi will buy oil from any cheap, reliable provider. Long-term, he’ll diversify among providers.
Hard to see how this is a “great deal” for Iran, as Mish breathlessly claims. Iran pays to send oil to India, and extends long credit (i.e., may never get paid for the oil).
Well, this is a good test of Mish’s unilateral free trader concept that getting something free from an exporter will benefit the importer. Let’s see what happens to the Indian oil industry — and to the many Indian industries that constitute the supply chain for the Indian oil industry. All this takes time, of course. Let’s see.
Due to low demand on account of sanctions, the lowest cost Iranian producers for the amount India is offering to buy, produce at a fraction of current oil prices. They get to sell oil gushing out of the ground by itself, for prices high enough to make distributed fracking profitable.
Sanctions are a girlie thing. “If you play with her, I won’t play with you anymore.” Go to a school yard. See for yourselves. Boys who try a stunt like that are ignored and ridiculed. They would destroy any perception of being a leader.
Oh please stop with the drama.
A total stop to Indian H1B visas and giving those in America 30 days to leave would be much more effective. With the additional bonus of forcing google, facebook, twitter, etc to hire American programmers.
Step two – withdraw of the American navy protecting shipping lanes near India.
Step three – Let China know no American complaints if they act aggressively towards India.
India will cave without one Iranian tanker sunk. Probably at step 0.5.
The US could stop Iranian tankers on the open seas or perhaps even sink one, or threaten to sink one, an open act or war. Of course sanctions are an act or war in and of themselves.
This feeling of american superiority blinds many nationalists.
Step one – america is already tighneting H1B. And companies are moving work out of america.
Step two – It is India that is policing its shipping lanes near India. It is US that is begging india to maintain its fleet at Indian ports, instead of bringing them back to US to fix them.
Step three – US is egging India to fight China. US wants to put sanctions on India as India gets most of its defense equipment from Russia.
India is not a pushover country like you old people think. It has 4th largest army in world.
3rd largest economy based on PPP terms.
Now to understand why it is doing this, there are naitonal elections next year. Gas prices are increasing a lot because of rupee devaluation and all the sanctions. No govt would like to loose an election just because trump decided it.
Most Americans have never left the country. They think the rest of the world is a complete dump when in fact it’s the US that’s the dump. We are hated all over the world and eventually it will be WW3 with every nation fighting the US just like Hitler’s Germany.
“…feeling of American superiority…”? No, we actually are – its not a feeling. With regards to Step 1, we wouldn’t do anything to benefit the native labor force because they are such a poor lobbying force compared to Amazon, Apple, etc. Your other points are great.
Were. Not are.
And India is a nuclear power, like Pakistan
“100% absurd setup where one person gets to set sanction policy for the entire world” Yes, but not only one person, but one nation, which believed to be entitled to crush economies, which do not dance by the tune of the pied piper. Even Venezuela´s woes are not totally of its own economic mismanagement.
Venezuela’s problems are 99% of its own making. That said, the US did not need to pile on. I disagree with Trump sanctions.