Iran and Indian relations are defined by the export and import of crude oil. But with the U.S. sanctions as they stand today along with the world financial instability the Indian government finds itself in debt with Iran. India currently owes the Islamic Republic 5 billion dollars, and the debt is mounting.
The difficulty lies in the U.S. sanctions, which prohibit transactions with the use of the dollar with Iran. Thus banks are afraid of handling such transactions out of fear and the country finds itself out of options.
Indian refineries, which import crude oil from Iran, are now stuck between a rock and a hard place as they nervously await the month of august, a month where it is still unclear whether they will be importing fuel from Iran.
With the third week of July over, Iran has yet to signal a continuance of trade with India. Such a signal indicates that India needs to find a solution to the payment problem, or else face the consequences.
India imports 400,000 barrels of crude from Iran a day and with such a supply cut off, the country could face disastrous results.
There are four reasons why the crisis is especially difficult for India to find a solution.
First is that India exports very little to Iran meanwhile importing a lot. This means that the country cannot hope to barter with Iran and hope to recoup the debt and the cost of importing crude oil with a form of goods exchange.