Iran has no plans yet to cut oil exports to India over a payment dispute, the semi-official Mehr news agency on Friday quoted an oil official as saying.
Iran warned India on Monday that it would stop exporting oil to India from August 1 if the seven-month-long dispute over payments of Iranian oil exports was not resolved.
“No decision has been made yet… the caretaker oil minister Mohammad Aliabadi will make the final decision on it if the dispute is not resolved in the next few days,” said Mohsen Ghamsari, head of the international affairs office at the National Iranian Oil Co. (NIOC).
NIOC, which supplies around 12 percent of India’s oil imports, set the deadline in a letter dated June 27 to Indian refiners, sources told Reuters in early July.
Iran, facing increased isolation internationally, and energy-hungry India have been looking to resolve an impasse triggered in December when the Reserve Bank of India ended a regional clearing mechanism under US pressure.
Since December 2010, India and Iran have been trying to find ways for New Delhi to pay for 400,000 barrels per day (bpd) it buys from the Islamic state. Analysts say Iran is putting pressure on India to accelerate the resolution of the payments mechanism dispute.
Iran says India owes it $5 billion for oil imports in recent months. Earlier this year, Germany allowed India to pay for the oil via Hamburg-based EIH bank, which handles international trade for Iranian companies.
But India halted that conduit in early April after discussions with German Chancellor Angela Merkel, and EIH has since come under EU sanctions. India has said it has a back-up plan to cope with any potential shortfall in oil imports.
After the warning by Iran, Indian refiners are seeking extra barrels from elsewhere, including top supplier Saudi Aramco and the United Arab Emirates. But the Iranian official said Saudi Arabia was unlikely to be able to replace Iran as an oil supplier to India.
“The Saudi oil can only find its way to Indian energy market if there is considerable discount given,” Ghamsari said. “A change in the oil supply source (Iran) is not on India’s agenda because any change … will create technical and economic problems for India.”
India’s newer refineries are configured to process heavy sour crude of the type Iran and other Middle East producers pump.
But Saudi Arabia’s heavier crude grades are already committed to term clients and the kingdom is also burning growing amounts of them domestically for power generation.
