Indian refiners say they are keen to maintain oil imports from Iran despite the US withdrawal from a nuclear deal with Tehran and threats to pressure the country with “the strongest sanctions in history.”
Iran is India’s third biggest energy supplier, selling it around 18.4 million tonnes of crude oil during 10 months between April 2017 and January 2018, according to the Indian oil ministry's provisional data.
Indian crude oil importers say they will adhere to their term supply contract obligations with the Persian Gulf producer, undeterred by Washington's efforts to restrain Tehran's oil sales.
State-run Bharat Petroleum Corporation Limited (BPCL) is set to receive 130,000 tonnes of its regular monthly term crude oil cargo from National Iranian Oil Company (NIOC) in the coming days, Platts reported on Tuesday.
According to the oil pricing agency, BPCL currently holds a term contract with NIOC to buy 1 million tonnes for its Kochi refinery over April 2018-March 2019.
India's flagship state-run refiner Indian Oil Corporation (IOC) also holds a term contract with Iran to receive 180,000 barrels per day (bpd) in the current fiscal year ending March 2019.
“IOC is keen to maintain its trade relationship with NIOC as Iran offers a longer credit period than the usual 30 days offered by other oil exporting nations," Platts quoted a company official as saying.
India was among a select group of countries which maintained oil purchases from Iran when the country came under intensified Western sanctions in 2011.
India's oil ministry officials were quoted as saying that they were watching for any fallout, which they saw at least six month off, from the US decision on Iran and its implications on trade with the country.
“This kind of geopolitical (tension) affects both consuming and producing countries. We have to live with the reality of the present geopolitics,” India’s Oil Minister Dharmendra Pradhan has said.
Iran’s Minister of Petroleum Bijan Zangeneh says Washington’s withdrawal from the nuclear deal will lead to “no significant development with regards to Iran’s exports of oil and condensate.”
Iran’s oil exports hit 2.6 million bpd in April, a record since the lifting of sanctions in early 2016. Shipments to Asia rose to multi-year highs of 1.81 million bpd from 1.40 million bpd in March, accounting for 67% of total monthly exports, up from 60% in March.
The Asian gain was led by a rise in flows to India, up by almost 60% to 670,500 bpd.
India's oil ministry has indicated that its imports of Iranian crude for the fiscal year 2018-19 will rise by more than 30% from the previous year.
Demand for Iranian crude in China is also likely to remain very strong even if sanctions are imposed, though refiners in Europe, South Korea and Japan are likely to tread more carefully.