India to slash Iran oil purchases before US sanctions bite

India to slash Iran oil purchases before US sanctions bite

Mubasher: Indian refineries would slash their monthly crude purchases from Iran by almost half this September and next October before US sanctions against Tehran take effect in November, according to official sources.

While India, the second largest consumer of Iranian oil after China, is attempting to win exempts from the US on the oil shipment sanctions, its imports from Iran for this month and the coming month would drop to less than 12 million barrels each, government officials told Thomson Reuters.

“We have a special relationship with both the US and with Iran, and we are seeing how to balance this all, and also to balance out the interest of the refiners and end-consumers,” one of the government officials told the news agency.

The US renewed sanctions against Tehran after withdrawing from the nuclear accord inked in 2015 between Iran and major global powers.

Some of the sanctions took effect in early August, while the raft which would target Iran’s hydrocarbon industry would come into force as from 4 November.

Although India does not recognise the reinstated US sanctions, wining a waiver is essential for the Asian nation to secure its exposure to the US financial system.

The White House would weigh waivers for Iranian crude importers, including India, but their purchases from the sanctioned oil rich country must cease eventually, US State Secretary Mike Pompeo said last week in New Delhi, after a meeting of high-profile officials.

If the US takes a tough stance on the matter, India would have no choice but to halt crude imports from Iran, the officials said.

Last June, Indian Oil Minister Dharmenda Pradhan told refiners to brace for “drastic reduction or zero” oil loadings from Iran from next November.

In response, Some refiners have either already exhausted or front-loaded their term contract to a large extent, which allows them the flexibility to go to zero if required, or until clarity on the waivers emerge,” Energy Aspect chief oil analyst Amrita Sen told Reuters.

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Source: Mubasher