Iran has overtaken Saudi Arabia as the second largest oil supplier to India between the months of April and June, as Indian companies were seeking to capitalize on huge discounts provided by the Iran. Iraq still holds first place for the chief oil supplier to India. With the increase in oil supplies from Iran, however, there is question about how a sudden stop to Iranian imports would affect the Indian oil market if India decides to comply with Washington’s sanctions against Tehran, due to come into effect on November 4th.
Reuters reports:
NEW DELHI (Reuters) – Iran was the second-biggest oil supplier to Indian state refiners between April and June, India’s oil minister said on Monday, replacing Saudi Arabia as companies took advantage of steeper discounts offered by Tehran.
India, Iran’s top oil client after China, shipped in 5.67 million tonnes or about 457,000 barrels per day (bpd) of oil from the country in the first three months of this fiscal year, Dharmendra Pradhan told lawmakers in a written reply.
He did not provide comparable numbers from the year-ago period. Data compiled by Reuters shows that India imported about 3.46 million tonnes, or about 279,000 bpd, from Iran between April and June last year.
State refiners, accounting for about 60 percent of India’s 5 million bpd refining capacity, had curbed imports from Iran last year in protest against Tehran’s move to grant development rights for the giant Farzad B gas field to other parties.
The refiners – Indian Oil Corp, Chennai Petroleum Corp, Bharat Petroleum and its unit Bharat Oman Refineries Ltd, Hindustan Petroleum and Mangalore Refinery and Petrochemicals – shipped in 9.8 million tonnes of Iranian oil in 2017/18, about a quarter less than a year ago, Pradhan’s reply showed.
For this fiscal year, the refiners had decided to almost double imports from Iran, which offered almost free shipping and extended credit period on oil sales.
Iraq continued to be the top oil supplier to India in the April-June period. New Delhi shipped in 7.27 million tonnes of oil from Iraq, while shipments from Saudi Arabia totalled 5.22 million tonnes, making it the third largest supplier, Pradhan’s statement showed.
India and other major buyers of Iranian oil are under pressure to cut imports from the country after Washington in May withdrew from a 2005 nuclear deal with Tehran and decided to reimpose sanctions on the OPEC member.
Reuters reported last month that India had asked refiners to prepare for drastic reductions or even zero Iranian oil imports.
The first set of sanctions will take effect on Aug. 6 and the rest, notably in the petroleum sector, following a 180-day “wind-down period” ending on Nov. 4.
“Indian refineries import crude oil from diverse sources including Iran, depending on technical and commercial considerations,” Pradhan said, without elaborating if the refiners would cut imports from Tehran.
Following Trump’s decision to withdraw from the 2015 Joint Comprehensive Plan of Action on Iran’s nuclear program, the oil market has been on a roller coaster ride. Trump’s decision to withdraw meant the reimposition of nuclear related sanctions on Tehran, and even some new ones. That news didn’t bode well as Iran is a major oil supplier, and the rise in oil prices didn’t sit that well even for Trump, who demanded lower prices which means that the global output needed to see an increase. Iran threatened to roadblock increased production in a bid to stab back at Washington for the sanctions. Western sanctions on Iranian oil is set to come into force on November 4th, and those who are currently purchasing oil from Iran will be faced with threats of secondary sanctions if they don’t comply.
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