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Global Geopolitical Series: No more SREs for India as election done with

Indian government has been at the forefront of negotiations with the United States over oil imports from Iran last November, when the Trump administration re-imposed majority of the sanctions, which were withdrawn after Iran reached an agreement with six world powers (United States, United Kingdom, China, Russia, France, and Germany) to curb its nuclear ambition in exchange for sanctions relief, after withdrawing from the agreement last summer. The deal, Joint Comprehensive Plan of Action (JCPoA), is better known as the Iran nuclear accord.

While the United States pressed India, which is the second biggest buyer of Iranian crude after China to curb its oil imports or face sanctions, India highlighted the importance of oil not only for its economy but for the ruling Bharatiya Janata Party’s reelection hope in the looming April 2019 election. India, which imports the majority of its energy needs have seen governments lose elections in the past as higher energy cost leads to higher food prices in the country.

The White House granted Significant Reduction Exceptions (SRE), better known as the sanctions waiver to several countries including China and India, which together accounts for more than 50 percent of oil imports from Iran, in exchange for a promise to significantly reduce the oil imported from Iran.

Yesterday, the White House formally announced that it plans to no longer renew SREs, which are set to expire in the first week of May. Here is the official statement from the White House announcing an end to sanctions waiver and measures taken by the United States to counter Iran and its oil imports, https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-working-bring-irans-oil-exports-zero/

With the general election already underway in India, which is the world’s biggest and will last more than a month, where as many as 900 million voters would head to polls to decide on the next government, another round of sanctions waiver unlikely, especially with Trump administration’s increased focused on the Middle East.

However, India is likely to continue with some imports as it did during past sanctions using state-owned UCO bank, which due to its regional operations can remain broadly unscathed by U.S. sanctions. 

The White announcement has pushed oil prices to higher highs. 

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