Former US President Trump abandoned the 2015 Iran nuclear deal and reimposed sanctions on Tehran in late 2018.
Until then, Europe and Turkey had consumed close to 500,000 barrels per day (bpd) of Iranian oil. India, Iran’s biggest client after China, was buying as much as 480,000 bpd in the fiscal year beginning April 2018.
At least one European refiner has held in-depth discussions with Iran’s state oil firm NIOC on resuming purchases and Indian refiners say they plan to reduce spot purchases to make way for Iranian contract barrels.
India, the world’s third largest oil consumer and importer, halted imports from Tehran in 2019 after a temporary waiver granted to some countries expired.
US President Joe Biden’s administration and Iran have engaged in indirect talks to revive the pact for Tehran to curb its nuclear activities in exchange for a lifting of sanctions.
Iran does not disclose its oil exports data, but assessments based on tanker tracking show exports fell from a peak of 2.8 million bpd to as low as 200,000 bpd in 2018. Analysts expect Iran to ramp up crude exports to 1.5 million bpd in the fourth quarter when sanctions are lifted.
Several Indian state refiners, whose refineries are suited to the crude, have committed to buying Iranian oil once sanctions are lifted. Indian refiners have raised the share of spot purchases to take advantage of cheaper barrels in a surplus market and replaced lost Iranian cargoes with US oil.
State-run Bharat Petroleum Corp, which plans to tap the spot market for 45% of its overall imports, will buy Iranian oil if sanctions are lifted, a company spokesman said.
High sulphur distillate-rich Iranian crude suits BPCL’s Kochi refinery and costs $ 2-$ 2.5/barrel less than similar grades, he said.
Hindustan Petroleum Corporation (HPCL) also said it would buy Iranian crude given the right price and economic suitability, its chairman M. K. Surana told Reuters.
Top refiner Indian Oil Corp expects to reduce spot purchases and can easily process about 2 million tonnes (14.6 million barrels) of Iranian oil this fiscal year, said a company source, who declined to be named.
An official at Mangalore Refinery and Petrochemicals Ltd said his company would also cut spot purchases and buy Iranian oil.
The resumption of Iranian oil supplies will help India replace lower supplies from members of the Organization of the Petroleum Exporting Countries, which have curbed output to support oil prices during the COVID-19 pandemic.
