Cooperating with China on oil imports has its limits

The idea of a buyer’s club to negotiate on oil prices has long been floated without much success

The decision of the United States (US) to not extend the waivers for importing Iranian oil has put three countries — India, China and Turkey — in a spot of bother. Of these three, India and China are two of the world’s three largest oil importers and major buyers of Iranian oil. The US decision to stop other countries from importing Iranian oil also comes across as high-handed and arbitrary, especially because Tehran’s alleged offence — violation of the 2015 Iranian nuclear deal — hasn’t been proven. Even European allies of the US are trying to find a way out of the American threat of sanctions in order to continue doing business with Iran. It is only natural then that New Delhi and Beijing are coming together to cooperate on energy imports.

Iranian oil isn’t something on which New Delhi can expect to find favours from Washington, either with Beijing or without (Bloomberg)

Even as such joint efforts are welcome, it is important to recognise the limitations of such an approach. First, the idea of a buyer’s club — in effect, a mirror image of the Organization of the Petroleum Exporting Countries (OPEC) — to negotiate on oil prices has long been floated. Tempting indeed, but this idea has never taken off. While India and China are strategic rivals, Japan and South Korea — the other two big oil importers — are US allies. It will be difficult to get the latter two to join a group targeting American bullying. Second, can India count on China? What if China decides to settle its own parallel deal with the US as a part of a larger trade deal? If this happens, it won’t be the first time. In 2014, China had decided to cut a separate deal with the US on climate change, leaving other developing countries out in the cold.