US President Barack Obama, in a bid to muster in another foreign policy triumph in the lead up to the Presidential Elections, has pulled out new sanctions against Iranian oil. The sanctions “forbid” foreign banks from assisting Tehran in selling its oil by any means whatsoever, which, if Bloomberg is to be believed, cost the country around $133 million every day in lost revenues. Following the EU embargo which kicked in from July 1 this year, this is another move to tighten the screws on Iran’s uranium enrichment program designed ostensibly to give Tehran the nuclear wherewithal to wreak havoc in what is undoubtedly the most volatile region on earth. Even so, with the West refusing to play ball on the oil front, there are quite a few other players warming up in the ballpark: the emerging markets.
New Delhi follows Beijing and Tokyo in offering insurance to the tankers that are transporting crude oil from Tehran. Indian Shipping Corp would begin services to Iran, with insurers from India vowing to five $100 million cover for each voyage along the lines of European companies that used to give unlimited insurance in case of spills, collisions and other risks.
India is one of a dozen Iranian oil importers that have been “given temporary exemption” from the sanctions and is the third biggest purchaser of Iranian crude oil. Now with the insurance issues settled, MRPL (Mangalore Refinery & Petrochemicals Ltd), which is India’s biggest Iranian crude buyer, and other Indian processors can now fill in the oil void that has also exacerbated industries in China, South Korea and Japan. The insurance settlement was extremely important because most of the oil tankers delivering oil to these countries were insured by Western companies – 95 percent of the tankers are insured by P&I Clubs which is a London-based group.
The Indian hierarchy – and by that we mean Rajan Mathai and Jaipal Reddy, the respective Foreign Secretary and Oil Minister – are adamant that New Delhi would only follow the sanctions that are imposed by the UN, and isn’t paying much heed to what Washington or Brussels have to say about the issue. This is an intriguing turn of events, for New Delhi hobnobbing with Washington has been pretty patent of late, and it would be a leaf out of Victorian irony, if it were India to come to Iran’s rescue as Washington vies to stampede on Tehran fiscal nerve-center.
Furthermore, Hajara has also iterated that leading insurers – like United India Insurance Co and also General Insurance Corp – are set to offer lower cover for the shipments from Iran when juxtaposed with what the European counterparts put on table. And the insurers are also going to offer a further $50 million for ‘hull and machinery cover’ and another $50 million for ‘protection and indemnity per voyage’, Hajara has claimed. So yes, India is pretty clear where it stands on the Iranian sanctions, as the emerging markets’ love-in with Tehran’s black gold looks likes giving Uncle Sam a mini-predicament in his quest to desiccate Iran’s oil supply to the world.
India’s stance is of course great news for Iran, and even China, with the former looking for options to fill the export void created by last month’s EU oil embargo, and the latter knowing that it’s not alone in questioning the legitimacy of what are evidently unilaterally imposed sanctions. New Delhi giving Beijing reassurances, helping out Tehran, and threatening to estrange Washington: when exchequers cry out for some much needed influx, oil politics can throw in quite a few oddballs.
