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NEW DELHI: The trade war between the US and China is expected to deflect some of the heat from Washington’s Iran sanctions away from India and provide New Delhi the opening to keep some Iranian oil flowing even after the curbs take effect on November 4. China’s main oil importer, Unipec, the trading arm of the world’s largest refiner by capacity Sinopec, earlier this month suspended US shipments.

This triggered a buzz that Beijing intended to slap duty on US crude in retaliation to Washington’s tariffs on Chinese exports, prompting refiners to keep off American oil. This is unlikely to change even after even after US crude was left out of Beijing’s list of retaliatory tariffs on US goods worth $16 billion last week. Open opinion says this was done to avoid affecting shipments already on way or committed by Chinese refiners. The second is that Beijing wants to keep US oil as a bargaining chip to be used later.

Industry players say either way the situation works well for India. Executives of state-run refining companies involved in oil sourcing operations said due to the cloud of uncertainty, Chinese refiners were unlikely to resume buying US oil anytime soon. “It takes two months for tankers to reach China from the US. Shipments would be fraught with the risk of being hit by tariffs if they are imposed in between,” an executive said. China is the largest buyer of US crude in Asia. It is also the largest customer of Iranian oil.

India is the second largest buyer of Iran’s oil. It is also looking at increasing US crude. “If China is not buying US crude then that leaves India, with 5-6% annual demand growth and ability to process a wide variety of crudes, as the only major Asian buyer with capacity to absorb the supplies shunned by the Chinese. Other Asian buyers — South Korea , Taiwan and Thailand — may not be able to accommodate much extra US oil,” he said. These facts give India bargaining room for securing favourable terms for US oil and a sanctions waiver.

“By making US crude a bargaining chip, China has also indicated its intention to keep buying Iranian oil, though there are reports Beijing will not ramp up shipments from Iran. This means Iranian oil will be in the market, which will help keep oil prices range-bound,” he said. The presence of Iranian oil in the market will publicly blunt the sanctions impact and give India the leverage for either a waiver or keep importing Iranian shipments under the rupee trading arrangement practiced during the previous sanctions put by the Obama administration.

Iran displaced Saudi Arabia as India’s second-largest crude supplier in the first quarter of current fiscal, regaining a position it lost seven years ago, as refiners rushed to take advantage of Teheran’s favourable terms. Iran was India’s secondlargest oil supplier after Saudi Arabia till 2010-11.

But it dropped to seventh position after India reduced import of Iranian oil to meet conditions of waiver granted by the Barack Obama administration when it imposed sanctions to curb Iran’s nuclear programme.

