Latest round of restrictions will impact oil market, and “our commercial entities” will take them into account

New Delhi has once again expressed its disapproval of non-U.N.-mandated sanctions on Tehran and said they will not affect India's “legitimate trade interests” with Iran, a “key country for our energy needs and it remains an important source of oil for us.”

Taking a break to address the media between two rounds of talks with his Iranian counterpart Ali Akbar Salehi here on Thursday, External Affairs Minister S.M. Krishna admitted that the latest round of restrictions announced by the West would impact the oil market. While it was up to oil companies to deal with the changed market conditions, once the latest round of sanctions imposed by the U.S. and the European Union took effect, “such measures should not impact our legitimate trade interests,” he said.

The U.S. sanctions on Iran's central bank will take effect on June 28 and the European Union's oil embargo begins on July 1.

Mr. Krishna said India always abided by the U.N. Security Council resolutions on Iran's nuclear issue. “As far as other sanctions, those decided unilaterally or regionally, we are aware of such measures. In a globalised world, these actions can have an impact on the markets.”

“Our commercial entities take these into account,” he said when asked about the impact of the latest round of sanctions.

Technical decision

Meanwhile, Iraq has overtaken Iran as India's second largest supplier of oil. But the government says it is a technical decision taken by the refineries to cut back on Iranian imports rather than the result of consistent counselling by the U.S.

Dr. Salehi said Iran was India's reliable partner in energy security and would remain so. In an allusion to the stalled Iran-Pakistan-India (IPI) pipeline, he urged India to look at energy resources that were reliable.

He arrived here as a special envoy of President Mahmoud Ahmadinejad to invite Prime Minister Manmohan Singh for the 16th Non-Aligned Movement Summit to be held in Tehran in late August.

Dialogue, the way out

On the nuclear issue, over which the West was mounting pressure on Iran, Mr. Krishna spoke against coercion and said New Delhi favoured dialogue to resolve the political issues and the framework of the International Atomic Energy Agency. “India has always held that the nuclear issue should be resolved through peaceful diplomacy, and the framework of the IAEA provides the best forum to address the technical aspects of the issue.”

At the outset, Mr. Krishna listed the reasons for both countries to bond: Iran is a crucial trade partner and major source of energy supplies; it is also a gateway for India to Central Asia; and both face threats from terrorism.

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