Why India is looking forward to resume importing oil from Iran
Once Iran concludes nuclear deal with world powers, following which sanctions on it may be lifted, India would prefer to opt for cheaper oil from Iran as well as regain strategic advantages
Erstwhile Iranian president Mohammad Khatami, while stressing upon the importance of dialogue, had once said in the UN, “Diplomacy is far safer, far cheaper, and far more comprehensive than a conflict.”
Years after the famous address, titled ‘Dialogue among the Civilisations’, his country Iran is ready to reap the benefits of dialogue. As nuclear talks in Vienna with world powers are nearing a conclusive end, Iran is readying trade proposals with many countries, including India.
Amidst the raging Ukraine-Russia conflict, the USA is looking to compensate ways to ensure the world's energy needs and put a lid on rising fossil fuel prices. Iran is a viable solution and all indications, as per the talk in diplomatic circles in Vienna, suggest that a deal is just a matter of time.
The US administration is ready to re-embrace the 2015 nuclear deal that was dumped by the Trump administration.
Another narrative from Vienna suggests that Russia is also keen on resolving the Iranian dispute and the ongoing Ukrainian conflict could be used as a leverage.
The question is, what does this mean for India?
For years, Iran remained a reliable energy partner of India, until New Delhi backed out, under pressure from the then US President Donald Trump.
When India decided to stop all oil imports from Iran in May 2019, it was termed as a suicidal strategy. Iran was then not only supplying cheaper oil but was also a strategic partner with India in central Asia.
Following India’s decision, Iran tried to curtail Indian role in Chabahar port project, Zahedan rail link project and some other strategic partnerships regarding Afghanistan and central Asia.
No doubt, the US remains the core of Indian foreign policy. The Indian government may have been right in fearing backlash from the Trump administration and buckling down, quoting business concerns with the USA.
But rumours in diplomatic circles suggest that it was more Israeli-Saudi pressure than the evident threat from the Trump administration. India preferred the Saudi-UAE-Israel trio over Iran. It was then believed that the losses from cutting of ties with Iran would be easily compensated, though that did not turn out to be the case.
Iran may be back in the fuel market sooner or later. India, at present, can only wish for early results of the Iranian nuclear talks and lifting of sanctions from Iran. It is because rising prices of fossil fuels are constantly derailing efforts to reignite the Indian economy in post-pandemic times.
Iranian oil trade also has some clear benefits. Firstly, most of our refineries are adept to Iranian sweet oil. Secondly, Iran trades oil for rupee or goods. Thirdly, transportation costs of goods from Bandar Abbas and Chabahar are lower.
Ali Chegeni, the Iranian ambassador in New Delhi, is on record suggesting that Iran is ready for the Rupee-Riyal mechanism. Surely, Iran will also benefit as India remains the third largest importer of oil in the world, with 80% of its energy needs fulfilled by imported oil. Iran needs a big consumer to resurrect its crumbling economy and India, on the other hand, will look towards the Iranian market for pharmaceuticals, machinery, and food products.
Obviously, the economic woes of both India and Iran may force them to cobble a relationship that may work for some more years.
Though India is still bound with its deals with Saudi Arabia, UAE and Israel, it may move in the Iranian direction once again. It is because India has learnt some lessons after moving away from the strategic access Iran was providing it in central Asia and Afghanistan.
Bypassing Pakistan to reach Afghanistan, former CIS countries, Russia and even Europe remains the priority and only Iran can provide this access.
It may be an agreement of selfish goals, but both the countries know the importance of a mutually beneficial arrangement for business and strategic needs. Again, it won’t be easy for the current Indian regime to side-line Israel and UAE, but then, there are very few options. With Taliban back in Kabul during in the wake of US forces exiting the troubled country, India needs Iran more than ever.
Meanwhile, Iran needs India not only to sell its oil but also to neutralize the influence Riyadh, Tel Aviv and Dubai wield on India.
(Views are personal)