The move is likely to be seen as a political victory in Iran, but it’s unclear how Chinese and Indian companies will actually be able to pay for Iranian oil without running afoul of the sanctions, analysts said.
“It’s a blow,’’ said David Hartwell, senior Middle East analyst at IHS Jane’s, adding that Iran may have discounted prices to keep the Chinese and Indians on their side. “If you have two major countries like India and China saying they will not abide by the sanctions, that’s going to keep a vital line open for the Iranians to continue to sidestep the sanctions and get foreign capital.’’
He said India and China could just be trying to buy time to diversify their oil supplies and may steer away from Iran, especially if Saudi Arabia — India’s largest source of oil imports — were to ramp up production and offer an attractively priced alternative.
The European Union last week imposed an oil embargo against Iran and froze the assets of its central bank. In December, the U.S. said it would bar financial institutions from the U.S. market if they do business with Iran’s central bank.
India and China are ravenous energy consumers and rely heavily on imported oil. Iranian oil accounts for 9 percent of India’s oil consumption and 6 percent of China’s, according to the latest data from the IEA.
Iran exports 2.5 million barrels of oil per day, about 3 percent of world supplies. About 500,000 barrels go to Europe and most of the rest goes to China, India, Japan and South Korea.
China has called for negotiations over Iran’s nuclear program. South Korea has been noncommittal about the sanctions, and Japan is seeking an exemption, saying its Iranian oil imports have steadily declined and probably will continue to do so.
Kyodo News agency reported that senior Japanese and U.S. officials on Thursday will hold their second meeting on the sanctions this month.
“I believe it may not be easy to come to a conclusion on this matter in the upcoming discussions,’’ Foreign Minister Koichiro Gemba said.
