New Delhi: With the US pressure on India and other countries to stop oil imports from Iran, the National Democratic Alliance (NDA) government is evaluating ‘all options’ to ensure the country’s energy security. This comes in the wake of the US government’s 4 November deadline, after President Donald Trump pulled the US out of a historic 2015 accord with energy-rich Iran, which was inked to curb the Islamic Republic’s nuclear programme in return for ending sanctions.

The development assumes significance for India, which is the world’s third largest oil importer and had been ramping up supplies from Iran—its third largest supplier after Iraq and Saudi Arabia. Elevated oil prices could adversely impact India’s trade deficit and, consequently, the current account deficit (CAD), which stood at 1.9% of GDP in the April-December period of FY18.

“We feel that Iran is a traditional partner. We have historical civilisational linkages with Iran," said Raveesh Kumar, spokesperson for India’s ministry of external affairs on Thursday.

Iran had a 10.4% share in India’s crude oil import volumes for 2017-18. India is the second-largest buyer of Iranian crude after China, with its oil imports rising by more than 25% in FY18 to $109 billion from a year ago.

“It should be noted that the statement was not India specific and it applies to all countries across the world. As far as we are concerned, we will take all necessary steps including engagement with relevant stakeholders to ensure our energy security," Kumar added.

Newswire agency Reuters reported that India’s oil ministry has asked refiners to prepare for a “drastic reduction or zero" imports of Iranian oil from November.

This comes in the backdrop of US Ambassador to the United Nations Nikki Haley’s visit to India. Hailey met Prime Minister Narendra Modi on Wednesday and urged India to stop its oil imports from Iran. India on its part views Iran as a gateway to Afghanistan and Central Asia besides a key source of energy.

In a recent press conference, Indian foreign minister Sushma Swaraj said that India would only adhere to UN sanctions and not unilateral strictures placed by countries.

According to news wire agency Press Trust of India, petroleum minister Dharmendra Pradhan on Thursday in Mumbai said that the government “will go by the national interest."

This also comes in the backdrop of the inaugural India-US “2+2" dialogue between the foreign and defence ministers of the two countries that was to be held in Washington on 6 July getting postponed for a second time.

“This scheduling change was prompted by reasons entirely unrelated to the bilateral relationship," the US embassy in New Delhi said in a statement on Thursday.

Mint reported on 28 June about state-run oil marketing companies (OMCs) plan to firm up long-term crude supply contracts and increase spot purchase of crude oil from the United States.

India has also been trying to stitch together new alliances and has proposed a consumers’ collective comprising major energy buyers—China, India, Japan and South Korea. The move assumes importance given that China and India are the world’s second and third largest oil importers, respectively. Japan and South Korea are placed at the fourth and fifth positions, respectively.

The global energy markets have been marked by growing uncertainties. The Organization of the Petroleum Exporting Countries (Opec), which accounts for about 83% of India’s total crude oil imports and 40% of global production, is also looking to strengthen its cooperation with Russia on production control. Falling production in Venezuela and geopolitical tensions have also added to the turmoil in the oil sector.

The cost of the Indian basket of crude, which averaged $47.56 and $56.43 per barrel in FY17 and FY18, respectively, rose to an average of $75.31 in May 2018, according to data from the Petroleum Planning and Analysis Cell (PPAC). The price was $74.89 a barrel on 27 June. The Indian basket represents the average of Oman, Dubai and Brent crude.