The U.S. government signed a law on December 31st aimed at crippling Iran’s primary revenue source – crude oil. Apparently, India didn’t get the memo. According to a recent report, India isn’t abiding by the new rules and sanctions put in place to limit the sales of Iranian oil. President Obama is considering slapping penalties on its ally as soon as June 28th.
The law would bar access to the U.S. banking system to any country that doesn’t demonstrate significant reductions in its purchases of Iranian oil during the first half of 2012. While India has made attempts to investigate alternative sources of energy, it has not yet asked its refiners to cease purchasing Iranian oil.
India is currently the third largest importer of Iranian oil behind China and Japan. South Korea is fourth. Recent data shows that both India and Korea actually increased purchases in January. South Korea plans to reassess their imports at the end of June.
India released a statement saying that they have not reduced purchases due to legacy contracts that run through March, and that they plan to reduce purchases once their current contract expires.