Tehran: Iran is maintaining its oil exports to India, despite receiving no payment for them for months, as that is the price it must pay to maintain market share, its OPEC governor Mohammad Ali Khatibi said in an interview published on Thursday.
“Preservation of market share has a price,” he told Sharq daily when asked about the Indian exports.
India owes Iran $2 billion for oil imports in recent months due to its inability to transfer cash to Iran thanks to US moves to isolate the Islamic Republic, which Washington suspects of seeking nuclear weapons, a charge Tehran denies.
The problem was triggered in December when the Reserve Bank of India ended a regional clearing mechanism, under US pressure.
After months of talks, the National Iranian Oil Co. (NIOC) wrote to Indian refiners, threatening to halt oil supplies in August unless a resolution to the problem was found, sources at the refiners and NIOC told Reuters.
But analysts were sceptical Iran would cut the flow to the giant Indian market and Iranian officials have played down the warning, saying exports would continue.
Khatibi said Indian buyers were placing their cash in an account ready for transfer to Iran when a solution is found.
“Of course our customers in India are depositing the price of the oil into a joint Iran-Indian government account.”
In the interview, Khatibi also complained about Saudi Arabia discounting oil and increasing output, saying it was a bid to grab market share from other producers.
Iran successfully opposed Saudi Arabia’s bid to raise production ceilings at a June OPEC meeting, but the number 1 producer raised its output unilaterally anyway and has offered discounted prices to some markets.
“It seems that Saudi Arabia’s actions in the oil market have the smell of competition,” Khatibi said.
“Moves undertaken by Saudi Arabia now demonstrate that there is no demand for (additional) oil they are after securing other producers’ (market) shares.”
He called Saudi Arabia actions “political” and that they should be met with a political response, but did not specify what that might mean in practice.
“If Saudi Arabia in its recent moves in the oil market is after political goals then the rules of the game are political and the answer should be a political one too.”
On prices, Khatibi said he did not see any significant drop this year.
“I think the oil price will fluctuate around the $100 mark,” he said.