Iranian vice president Eshaq Jahangiri acknowledged on Tuesday that USA sanctions would hurt the economy but promised to "sell as much oil as we can" and protect its banking system.
India prefers to buy Iranian oil because of the proximity of that country's ports to refineries along India's western coast and also the 60 days of credit that Tehran allows for purchases.
Trump swipes at NATO spending ahead of summit Pompeo offers support for Taliban peace talks during surprise Afghan visit Trump: China may be exerting "negative pressure" on North Korea MORE ramped up his warnings to Iran on Tuesday, saying that the US and its Gulf Arab allies would pay a "real high cost" for Tehran's "malign behavior" in the Middle East and elsewhere.
Pompeo made a point to mention recent threats by Iranian President Hassan Rouhani over the Strait of Hormuz, through which a third of all oil traded by sea passes.
The clarification by Iranian Embassy came a day after Iran's deputy ambassador and Charge d'Affaires Massoud Rezvanian Rahaghi cautioned New Delhi that it will stand to lose "special privileges" if it cuts import of Iranian oil following U.S. sanctions. "That's the commitment we have had for decades".
Eshaq Jahangiri said Washington was trying to stop Iran's petrochemical, steel and copper exports.
Referring to the relation between the two countries, Rahaghi said his country has been a reliable energy partner for India ensuring the interest of both consumers and suppliers. While allies like Saudi Arabia, the UAE and Kuwait say they are willing to increase their own production as necessary, additional output may not be enough to satiate demand. Trump himself has been tweeting that oil suppliers must do more to lower prices ahead of midterm elections this fall.
Global oil benchmark Brent fell more than $2 a barrel on Wednesday after U.S. President Donald Trump threatened to levy new tariffs on China and Libya announced the reopening of key oil export terminals.
Earlier, the United States has told India and other countries to cut oil imports from Iran to "zero" by November 4 or face sanctions.
The Chabahar port is being considered a gateway to golden opportunities for trade by India, Iran and Afghanistan with central Asian countries in the wake of Pakistan denying transit access to New Delhi.
"America seeks to reduce Iran's oil sales, our vital source of income, to zero", he said, according to Fars news agency. He warned such imports largely would be "sanctionable activity and we will enforce those sanctions".
Supply to the USA market has also been squeezed by the loss of some Canadian oil production.
Pompeo, who earlier visited Afghanistan, Japan, North Korea and Vietnam on his trip, left the UAE heading for a NATO summit in Brussels that Trump will attend.