New Delhi: The US government has offered to help India get alternative supplies for Iranian crude as it looks to squeeze the Arabian Gulf producer's oil revenue, according to three people with knowledge of the matter.
The US may help broker deals with suppliers such as Iraq and Saudi Arabia, the people said, declining to be identified because the information is confidential.
Saudi Arabia has already offered to replace Iranian oil supplies if needed, two of the people said.
The US is in talks with countries around the world on reducing their dependence on Iranian oil, Victoria Nuland, a spokeswoman at the State Department in Washington, said Thursday.
The assurance follows Iran's offer to sell extra crude to India as Tehran, Opec's second-biggest producer, cuts supplies to some European nations in response to sanctions imposed over its nuclear programme.
Better deal
The US and European Union tightened sanctions on Iran last month, restricting trade and financial transactions. They say the programme is a cover for developing atomic weapons. Iran denies the accusation.
"This move is going to have an impact and India is going to be hard-nosed in the way they are going to deal with it," Praveen Kumar, an analyst at Facts Global Energy in Singapore, said.
"It's turned the situation a little in favour of India, which can potentially use it to get a better deal from Iran."
The international measures have made it difficult for India and Iran to preserve $9.5 billion (Dh34.9 billion) in annual crude trade, after the Reserve Bank of India dismantled a mechanism used to settle payments in euros and dollars in December 2010.
Transactions are currently routed through Turkiye Halk Bankasi, based in Ankara, which has told Indian refiners it may no longer be able to act as an intermediary, four people with knowledge of the matter said on January 10.
The Turkish lender will stop processing transactions for supplies into Turkish refineries from July, an official at Tupras Turkiye Petrol Rafinerileri, which operates four plants, said on Thursday.
5 million tonnes
India is seeking an additional five million tonnes a year of oil from Saudi Arabia in the year ending March 2013, Junior Oil Minister R.P.N. Singh said in New Delhi on Thursday.
Saudi Arabia is producing 9.8 million barrels of oil a day and has spare capacity of 2.5 million barrels a day, according to Prince Salman Bin Abdul Aziz, the kingdom's deputy oil minister.
Indian refiners including Essar Oil, Bharat Petroleum, Hindustan Petroleum and Mangalore Refinery and Petrochemicals, all of which buy Iranian crude, plan to increase imports from Saudi Arabia as they diversify supplies, people with knowledge of the plans said in November and January.
Saudi Arabia, Opec's largest producer, has told Indian buyers it can replace some of the Iranian crude, two people with knowledge of the matter said on July 12.
"The oil market is well-supplied at the moment," Kumar said. "The Saudis have said they have enough spare capacity. It's the psychological impact of the tensions over Iran that is keeping the price up."
The US's talks with nations "include helping partners and allies identify alternative sources of supply, based on the conversations we are also having with supplier nations", the US State Department's Nuland said on Thursday.
