Amid reports claiming America has threatened India with sanctions if it does not reduce its Iranian oil imports by June end, US officials on Friday said Washington and New Delhi are having "productive conversations" on the issue and termed the reports as "highly speculative".
"Recent headlines on India and Iran have been highly speculative," a US government official said, referring to the reports appearing in a section of American media.
The report quoted Obama administration officials as saying that India has failed to reduce its purchases of Iranian oil, and if it doesn't do so, President Barack Obama may be forced to impose sanctions on New Delhi.
"No decisions have been made and we continue to have productive conversations with India on this important issue, both in New Delhi and in Washington," the official said.
"We welcome statements from Indian officials that India is seeking to diversify its crude oil sourcing and encourage this positive trend," the official said.
In response to a query, sources in the Indian embassy indicated that US officials have reached out to them to convey that the news reports were "not an accurate reflection" of the US policy.
They remain focused on consultation and discussions with the Government of India on this issue, sources said.
Under the Iran sanctions legislation, a country is subject to American sanctions if it doesn't make a "significant" reduction in its Iranian crude oil purchases during the first half of this year.
India imports 12% of its oil from Iran, which is No 2 producer in the Organization of Petroleum Exporting Countries.
A State Department spokesman welcomed statements from Indian officials that India is seeking to diversify its crude oil sourcing.
"As Secretary (of State, Hillary) Clinton noted in her recent hearings on Capitol Hill, we view India's efforts to reduce its dependence on Iranian oil positively. We welcome this trend and encourage it to continue," the spokesman said.
Figures available from open source documents reflects that India's purchase of oil from Iran has come down in last few years.
India in 2008-09 purchased 21.8 million tonnes of oil from Iran, which dropped to 21 million in 2009-10, and 18.5 million tonnes in 2010-11.
Even percentage wise too, there has been considerable drop in India's reliance on Iranian oil from 16.5% in 2008-09 to 13% in 2009-10 and 11% in 2010-11. Latest figures estimate that it has further dropped to 10%. As India is increasingly looking at other sources of energy, including the recent talks it had with Saudi Arabia, India’s purchase of oil from Iran is expected to drop further. However, US officials said there is still work to be done in this regard, talks for which are currently going on.
"As secretary Clinton also noted, there is still work to be done. We continue to have very candid conversations with India about our seriousness in enforcing sanctions revenues that fuel nuclear activity by the Iranian regime," the spokesman said, adding that those conversations are ongoing in both Delhi and Washington.
"India continues to be a valued partner in our common objective of preventing Iran from acquiring a nuclear weapon," the spokesman added.
In the past few weeks, the Obama Administration has said that it does not want to implement Iranian sanctions in a way that hurts its allies.
"The US is implementing sanctions on Iran in a way that had the desired effect just to pressure and isolate Iran further, and did not have unintended consequences for any of its allies, or more broadly, for the international oil market," White House press secretary Jay Carney said recently.
However, the American Jewish Committee - the most powerful lobbying group in the US - and a few other lawmakers in separate letters to Indian ambassador to the US Nirupama Rao had expressed dismay at India's expanding trade ties with Iran and had urged New Delhi to reduce its dependence on Iranian oil.
In a recent unusual statement, the Indian Embassy here had said that many stories about India's import of Iranian crude oil carried by the media here had presented a distorted picture by basing their conclusions on speculation and inaccurate information.
"Unfortunately, though, a series of recent media reports have presented a picture which not only distorts India's foreign policy objectives and energy security needs, but also creates misunderstanding about its actions. These reports overlook the imperative of India's dependence on oil imports from Iran to serve the energy needs of its people, more than 400 million of whom do not as yet have access to commercial energy," the Indian Embassy said.
"Allusions in the media that India's overall oil imports from Iran are increasing just because its monthly uptake of Iranian oil reportedly increased in January this year are based on selective use of information, misrepresenting the fact that in aggregate terms, crude imports from Iran constitute a declining share of India’s oil imports.
"Nonetheless, given the imperative of meeting the energy needs of millions of Indians, an automatic replacement of all Iranian oil imports, is not a simple matter of selection, or a realistic option," it said.
"India's relationship with Iran is neither inconsistent with non-proliferation objectives, nor do we seek to contradict the relationships we have with our friends in West Asia or with the United States and Europe," the Indian Embassy had said.