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After The Bomb: India Eyeing Saudi Oil

February 14, 2012

Saudi Arabia has offered additional crude supplies to India in a move that could help Delhi replace Iranian oil-imports, Saudi state television reported.

Saudi Arabia is the biggest oil supplier to India is the only oil producer with significant spare capacity to replace any fall in supply from its regional rival Iran.

“King Abdullah offered all assistance, including additional supply of crude oil, should India require the same. He expressed eagerness to strengthen relations with India,” the Indian government said in a statement on Tuesday.

India’s defense minister is presently in Riyadh to discuss defense cooperation with his Saudi counterpart. Sources told the Times of India that oil is on the two defense minister’s agenda.

Iran, whose oil and banking industries have been targeted by an extensive raft of sanctions from Western nations, has become increasingly reliant on exports to China, India, and Russia to maintain its cash-flow.

India, which developed its own nuclear weapons in defiance of international pressure, has pointedly ignored sanctions by the United States and European Union aimed at halting Tehran’s nuclear program.

Iran’s oil sales to India have been fraught with payment problems in the past 13 months as available banking channels have become increasingly scarce.

India currently pays Iran for oil through Turkey’s Halkbank, but there are growing concerns among Indian importers that banking channel may also be closed under international pressure.

But India’s determination to pursue trade with Iran became circumspect after Monday’s bomb attack in New Delhi, which Israeli officials blame on Tehran.

Trade officials in Dehli told India Today that Indian refineries have stepped back from more deals with Iran and want government officials to find new exporters they can buy from.

While senior Indian officials have yet to blame Iran for the bombing, the Times of India reported Indian intelligence officials suspect that Iran used local terrorists carry out Monday’s attack.

Police officials told reporters that the bomb was of a type never seen in India before and was built by “foreign experts.” They would not elaborate further on their suspicions.

That has led Indian officials to say, should Iran be found culpable, that there will be “consequences” for Tehran.

India, Iran’s second-biggest oil client after China, buys 12 percent of its oil needs from the Islamic nation, worth about $12 billion annually.

Indian refiners are seeking at least an extra 2.6 million barrels of Saudi crude on top of their contracted supplies for March, sources told Reuters last week.

Saudi Oil Minister Ali al-Naimi on Monday said Riyahd can increase production by about 2 million barrels per day almost immediately.

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