By Rakesh Sharma (Bloomberg) — India’s state-owned oil refiners are hesitant to buy US-approved Iranian oil and products because of challenges with payment, shipping, and insurance, according to sources familiar with the situation.
The US recently issued its third waiver allowing purchases of Iranian oil that is already on ships. This move is part of the Trump administration's strategy to address rising prices by increasing supply. Previous waivers also covered Russian oil shipped by sea.
The one-month grace period for Iranian crude has prompted the National Iranian Oil Company and brokers to reach out to major buyers in Asia, but many have shown reservations. Indian refiners share similar concerns as those in China, where the state-owned Sinopec announced plans to avoid Iranian shipments. They feel the timeframe for delivery with the one-month waiver is too tight.
Refiners in India, the third-largest oil importer globally, have been offered Iranian crude and liquefied petroleum gas, which is in short supply for cooking in the country. However, these negotiations are not public, and the sources wish to remain unnamed.
Iran used to be a significant supplier to India, providing 11.5% of total oil imports at its peak, according to Kpler, a data intelligence firm. However, imports ceased in 2019 due to US sanctions, causing Indian refiners to be cautious ever since.
This long gap has slowed down the process of purchases, as refiners face unclear issues regarding shipping, insurance, payment methods, currency, and whether Iranian ships would be allowed at Indian ports. Consequently, there hasn't been much progress in discussing prices and delivery timelines, the sources mentioned.
In contrast, India has quickly moved to purchase Russian crude thanks to existing logistics and trade channels and earlier waivers. The country was a major buyer of Russian oil until US pressure increased last year, leading it to seek alternative sources.
Refining executives believe that buying from Iran would be easier if there was a formal government framework in place, but New Delhi hasn’t provided any direction, leaving refiners to conduct their own investigations.
A spokesperson for India’s oil ministry did not immediately respond to a request for comment.