Indian Oil Corp: Cutting Iran Oil Imports to Zero Unrealistic

The prospects of Indian refiners cutting their intake of Iranian crude oil to zero are unrealistic, the chairman of Indian Oil Corporation told S&P Global Platts.

Although the company, the largest oil player in India, has reduced its imports of Iranian crude, Sanjiv Singh said the chances of cutting all the way to zero are slim, adding that the company had booked Iranian oil cargos for delivery this month despite the fact sanctions come into effect Monday.

"We strongly believe that if Iran goes out of the global market, it will destabilize the market -- at least for some time. Personally, I do not think India can afford zero Iran supplies," Singh noted.

The executive went on to say that IOC had reduced its imports of Iranian crude “slightly” beginning in October as Washington considers a waiver for India from the sanctions. In fact, the Economic Times—an Indian daily, reported on Friday citing a source in the know, that the waiver had already been granted on the condition that Indian refiners reduce their combined imports of Iranian crude by 35% in fiscal 2018-19 from the previous year.

Iranian crude shipments to Indian refiners hit 600,000 bpd in September before declining to 500,000 bpd in October, a level expected to be maintained this month as well.

At the same time, imports from the United States had also risen significantly earlier this year, after President Donald Trump announced the sanctions for the first time. In May, US exports of crude to India averaged 152,000 bpd, up from 29,000 bpd for January to April, and this jumped further to 261,000 bpd in June.

Afterwards, however, shipments began to decline mostly on the back of the higher price of US crude, according to Singh.

India’s Oil Minister Dharmendra Pradhan said Saturday that India and other leading oil buyers would benefit from the US waiver they have been granted. “In the current geopolitically challenging scenario, India has managed to convince international leaders,” Pradhan said.

The US said on Friday it would temporarily allow eight importers to keep buying Iranian oil when it re-imposes sanctions on Monday to try to force Iran to curb its nuclear, missile and regional activities.

US secretary of state, Mike Pompeo, who announced the decision, did not name the eight; however, a source familiar with the matter who spoke on condition of anonymity, said that China, India, South Korea, Turkey, Iraq, Japan and Taiwan are among them.

source: Financial Tribune