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India has allowed its state-owned oil refineries to import oil from Iran using the latter’s tankers and insurance, following US sanctions against the Middle Eastern country.
Due to Shipping Corp of India’s (SCI) refusal to carry Iranian oil after US President Donald Trump withdrew from the 2015 nuclear deal and reimposed economic sanctions, India will instead use Iranian ships and cover, reported Reuters. This mirrors a move by China, which also shifted almost all oil imports from Iran to vessels from National Iranian Tanker Co (NITC).
According to the report, this may mean that Iran may not be completely cut off from the global oil market once the US sanctions take effect in November. India and China are among the top buyers of crude oil from Iran.
“We have the same situation (as most Western shippers) because there is no cover, so we cannot go (to Iran),” an SCI official told Reuters.
India has turned to NITC after many marine insurers and reinsurers stopped serving Iran in order to avoid violating the sanctions, which prohibit entities doing business with Iran from transacting with the US.
The report, citing two anonymous sources, said that until August, SCI had a contract to import Iranian oil for Mangalore Refinery and Petrochemicals Ltd, Meanwhile, Eurotankers, which agreed to deliver two cargoes of Iranian oil monthly for the refinery, said that it will stop shipping from Iran beginning September.
“The shipping ministry has given refiners permission to buy Iranian oil on a CIF (cost, insurance and freight) basis,” an Indian government source said.
Tehran is offering almost free shipping and an extended credit period for importers that would like to buy its oil, making it an attractive deal.
India’s state refiners imported a record-high of 768,000 barrels per day from Iran in July, and had planned to double its oil imports in 2018/19.
