Iran may halt crude supplies to India in August

New Delhi: Escalating matters on a payments dispute, Iran has warned India it will stop crude oil supplies from August if a long simmering dispute over payment for crude oil imports was not resolved soon. While some Indian refiners denied receiving any such missive from the Iranians, others confirmed that the threat indeed was real.

At the Iranian end, reports said that oil industry officials confirmed the dispatch of such a letter to Indian refiners.

According to a report, amongst other things the letter from the Iranian oil company states that the "…NIOC (National Iranian Oil Co) would hardly be in a position to deliver the Iranian crude oil to our partners in India ... in August 2011 unless concrete solutions are worked out for remittances of NIOC's dues."

Media sources contacting NIOC officials were told that they were hoping that a solution to the problem would be found soon as they did not wish to impact their relationship with Indian refiners.

Iran is the second-largest crude supplier to India after Saudi Arabia, accounting for between 12-14% of the country's oil imports. Indian refiners, including Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd (HPCL) and MRPL use Iranian crude.

Indian and Iranian attempts to find a viable payments system have been stymied with Germany recently blocking use of a German bank which was being made use of by India and Iran as a via media for oil payments.