India, which is one of the biggest allies of the US in Asia, might have to face some sanction from it due to Indo-Iran oil trade. India might run into a conflict with the new law that has been passed by the Obama administration which restricts payments for Iranian oil. Iran is the largest exporter of oil to India and has not been able to cut back on its purchase, which might force White House to impose some penalties on India.
Under the new US law, if any country fails to cut down on oil purchase made through Iran Central bank during the first half of the year, then the US would be compelled to bar access to the U. S. banking system for any Indian bank that has been processing those payments through Iran's central bank.
Although India has not told its refineries to stop the purchase, it has asked processors to find alternate sources which might gradually reduce their dependence on Iran. India has been under significant pressure from the US to reduce its dependence on Iranian oil, but hasn't been able to do so as annual crude term deals of refineries with Iran typically run from April to March. The reduction could only start after the termination of earlier contract.
India is a developing country, which is why it is highly dependent on these energy resources. India purchased an average of 328,000 barrels a day of Iranian crude in the first half of last year, which made it one of the three biggest importers of Iranian oil.
With the growing pressure on India, it is hopeful that the democratic ties between the two nations would not be hampered and both would be able to meet each other half way. India expects that the US will reach an accommodation with the world's most populous democracy.