Once US sanctions are relaxed, India will resume buying oil from Iran

A senior government official said that India would consider resuming the purchase of crude oil from Iran.

India stopped importing oil from Iran from mid-2019 onwards following sanctions on the Persian Gulf nation by the Trump administration.

The US and other world powers are meeting in Vienna to revive the Iran nuclear deal.

“After the ban is lifted, we can resume oil imports from Iran,” the official said.

Indian refiners have started preparations and can enter into contracts faster after the restrictions are lifted.

The official said, “We already have a template for commercial terms and we can enter into contracts very quickly.

Iranian oil prices coming to the market will not only cool but will also help India diversify its import basket.

In 2020-21, Iraq was India’s largest oil supplier, followed by Saudi Arabia and the UAE. Nigeria was the fourth largest supplier and the US was the fifth.

“We are advocating for oil producers to reduce the output cap and pump in more oil,” the official said. “Rising oil prices are a threat to fragile economic recovery around the world, including India.” India, it said, did not advocate such output increases when prices were within a certain reasonable range.

“When oil prices crossed $ 63-64, we expressed our concern,” he said. “We want prices that are fair to producers and affordable to consumers.” India – once Iran’s second largest customer – imports more than 85% of its oil needs. Iranian crude will bring many benefits, including a longer credit cycle and lower savings on freight costs.

Former US President Donald Trump tightened sanctions in 2018 and Iranian exports declined after exemptions for some countries, including India, ended in 2019.

This week Iran and world powers began their most serious effort to revive the nuclear deal.

Iran again banned the nuclear program after Iran withdrew from the agreement and re-imposed sanctions on Iran. Although the new US president Joe Biden wants to rejoin, both sides say the other should take the first step.

India was the second largest buyer of Iranian oil after China before the sanctions were halted in May 2019.

In 2017-18, Iran was its third largest supplier after Iraq and Saudi Arabia and met about 10% of its total needs.

As of 2010–11, Iran was the second-largest supplier of crude oil after Saudi Arabia, but Western sanctions on its suspected nuclear program pushed it to seventh in subsequent years. In 2013–14 and 2014–15, India purchased 11 million tonnes and 10.95 million tonnes respectively.

Sourcing from Iran increased to 12.7 million tonnes in 2015-16, making it sixth. In the following year, Iranian supplies jumped to 27.2 million tonnes to reach the third position.

Iranian oil is an attractive purchase for refiners because the Persian Gulf nation offers 60 days of credit for purchases, with options not available – Saudi Arabia, Kuwait, Iraq, Nigeria and the US.