The Indian government is mulling to pay imports by third-largest oil supplier through rupees since American President Donald Trump has restricted the use of US dollar to cut off Iran’s import to zero.
As reported by Business Standard, A senior officer believes this could act as one of the measures to defend Rupee. The weakening currency against US dollars and high crude oil prices have resulted in market turmoils leading to a volatile stock market. India imports 80% of its total crude oil demand.
Although, it is also believed that rupee will further lose its value against dollars if the possibility of gain from using rupee against crude oil turns into the risk of losses.
Indian plans to import crude oil and US Sanction
- India was supposed to lock a deal of 25 million tonnes of Iranian crude oil in the current fiscal year.
- As per recent media report, India may only import half of what it planned to import.
- Reliance Industries have completely restricted oil from Iran
- Owing to US sanction, India was also considering to limit import to hedge itself in the western reinsurance market.
- All US-allies are under the pressure to cut crude oil import from Iran.
Indian as an alternative channel was in conversation with European Union but it is likely to use IDBI and UCO bank to route the payment as European banking channel will be blocked immediately after US sanction comes into effect.