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India to import oil from Iran and save $8.5 billion

Staff writer |
Officials from the foreign and petroleum ministries of India are considering a proposal to import more crude oil from Iran. That move could save India $8.5 billion in foreign exchange.

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Iran was the second largest supplier of crude to India before international sanctions were imposed on the Gulf nation over allegations that it was developing a nuclear bomb, which Tehran denies. However, with global crude prices rising again, India is considering increasing imports from Iran. In addition, India pays for the crude in rupees and not dollars, which has become more expensive.

According to the external affairs ministry, India sources 180 million tonnes (mt) of crude oil annually from abroad, and Iran has fallen to the eighth or ninth position out of the top 10 sources of imports.

Energy-starved India imports nearly 80% of its fuel requirements. In 2012, India was the fourth largest energy consumer with a consumption of 563 million tonnes of oil equivalent, according to a BP Plc, the World Bank and PricewaterhousehouseCoopers estimate.

India pays Tehran in rupees, unlike other countries, but has been reducing supplies from Iran to ensure Indian financial institutions are not cut off from the US financial system, should Washington retaliate.

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