US asks India to cut back on Iranian oil to avoid sanctions

Virtually putting India and 11 others countries on notice, the United States has asked them to significantly reduce by June 28 the purchase of Iranian oil to avoid sanctions, as it announced a list of nations that will be exempted from the curbs.

Secretary of State Hillary Clinton on Tuesday night announced that 11 countries, mostly from Europe, would not be subject to US sanctions regarding Iran. Japan is the only Asian country among the nations exempted from the sanctions.

Later, a senior State Department official urged 12 other countries, including India, China and South Korea, to follow the example of those exempted from the curbs.

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Citing the case of Japan, which has decreased its import of Iranian crude oil between 15 to 22 per cent, the official told reporters that this exception applies only to countries that have significantly reduced the volume of crude purchase from Iran.

"If you look at open-source data in the last half of 2011, even after that tragedy (Fukushima nuclear disaster following a massive earthquake and tsunami in Japan)... they reduced on seasonally-adjusted terms between 15 (per cent) and 22 per cent.

"That gives some indication and again, with the European Union, they have gotten to zero. So we look forward to hearing from countries what their views are on what they can do," the official said on the condition of anonymity.

Besides Japan, the countries exempted from sanctions are Belgium, the Czech Republic, France, Germany, Greece, Italy, Japan, the Netherlands, Poland, Spain and the United Kingdom.

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There are approximately 23 countries in the world that have been importers of Iranian crude oil, so that is the total limit of the number of countries that can be considered under the exception.

"If there are countries that believe that they should be considered under it, we are happy to have discussions with them. I would only underscore that these cases with Japan and the 10 European countries that they serve as a model, as a benchmark that others can look at and determine whether they are able to make commitments to deny Iran export markets for its crude oil," the official said.

The official was speaking after Clinton announced names of the countries exempted from sanctions for significantly reducing their volume of crude oil purchases from Iran.

As a result, Clinton said, she will report to the Congress that sanctions under the National Defence Authorisation Act for 2012 will not apply to the financial institutions based in these countries, for a renewable period of 180 days.

There is a provision in this legislation that calls for the US president to make a determination on whether or not price and supply conditions in the market allow for countries to switch from Iran to other suppliers of Iranian crude oil.

If the president does make that determination, that then triggers or calls into action another set of sanctions that come into effect on June 28. And those sanctions are against any transactions with the Central Bank of Iran by any financial institution, whether it's private or public, related to the purchase of petroleum or petroleum products for Iran.

"So, bringing that back to the specific point of what happens to other countries, in terms of countries that were importers of Iranian crude oil, there are 12 others that fall into that category. For those 12 countries, they now have an example that they can look at to determine what kind of actions that they might be willing to consider domestically," the official said.

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"We would hope that any country that feels that they have the capacity to reduce their imports of Iranian crude oil, that we would be open to the soonest possible discussion with them. There are a number of countries that have begun those discussions with us, and we are very interested to continue to pursue them in great seriousness," the official said.

A senior State Department official later said the US is in conversation with India, China and South Korea in this regard.

"We look very much forward to hearing what kinds of messages those countries are able and willing to bring to us and to continue to pursue them in a serious and professional conversation," the official said requesting anonymity.

Without naming, the official said there are countries that are coming together and demonstrating that they recognize the need to deny Iran export markets.

"To the extent to which we can reinforce the solidarity that we have with these countries and demonstrate the success of moving forward, that is a strong reason to be able to acknowledge that and put it forward," the official said.

However, sources said India's case has not been assessed, which is expected to be done by the US sometime in June or July.

"There is time for India," another official said, adding India not being in this group does not mean much."

"For other countries they are giving time till July," the official said.