India, which is dependent on crude imports, is Iran’s top oil client after China. Despite this, India bought 15.9 percent less crude from Iran in June compared to May. After that, Iran threatened that it would suspend all privileges in bilateral trade with India, including payments in rupees.
Last week, Reuters reported that India’s Oil Ministry has asked refiners to prepare for a “drastic reduction or zero” imports of Iranian oil from November, when US sanctions against Iran start.
“(India) has asked refiners to be prepared for any eventuality, since the situation is still evolving. There could be drastic reduction or there could be no imports at all,” Reuters wrote quoting its sources.
While India doesn’t recognize unilateral US sanctions against Iran, the country is exposed to the US financial system and could get caught in the crossfire. Washington could target Indian companies and banks that do business with Iran.