India's continuing purchase of Iranian crude oil remains a major impediment to the “crippling” part of those sanctions. By cutting Iran off from the global crude oil markets, the United States is hoping to put enough pressure on Iran to get them to give up their nuclear research program (folks in Washington also really, really hope that the sanctions will lead to the unlikely event of the Iranians overthrowing their government due to the negative impact a lack of oil sales will have on their economy). While the European Union is phasing in a ban on Iranian oil, plenty of Iranian crude is flowing to China and India; making the sanctions painful, but survivable, at least in the short-to-medium term.
Even the optimists in Washington will admit they can apply little leverage to get China to abandon their Iranian oil purchases, but they hope that India could be swayed. So far India has maintained that they need to continue to buy Iranian oil since many Indian refineries are configured to process specific types of crude that come out of Iran and that there aren't substitute volumes readily available on the global market. India has also questioned the validity of the US sanctions since they are not backed by the United Nations.
According to the Indian publication Business Today, Wednesday's meeting is likely to focus on the US suggesting that American shale gas could be a substitute for Iranian crude oil. This is interesting for a couple of reasons: first we're talking about replacing oil with natural gas, which would mean a massive restructuring of India's energy mix – a drastic shift away from crude oil products to natural gas (using natural gas as a vehicle fuel for example, instead of gasoline); and since the US currently lacks a liquefied natural gas (LNG) export infrastructure, it would be a number of years, at least, before large volumes of US shale gas could be heading to India in a best-case scenario. How India would get by in the meanwhile without Iranian crude oil imports is an open question.
If accurate, the Business Today report points at American officials desperate to get their Indian allies onside with the Iranian sanctions regime. According to the sanctions passed by the US Congress, the United States could levy penalties against any country trading with Iran in violation of our sanctions, and while it is hard to imagine the United States fracturing diplomatic relations with India with such an action, it is also clear that as long as India (and China) keep importing Iranian oil, it is highly unlikely that the sanctions will have the desired effect.
Stay tuned for Wednesday's meeting.
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