India is keen to take advantage of the 60-day US sanctions waiver on Iranian oil by resuming imports of discounted crude from Tehran, although some refiners may wait to see if there will be more operational guidance from the US Treasury’s Office of Foreign Assets Control (OFAC) before entering into purchase contracts, sources have said.
“The temporary sanctions relief has reopened the possibility of sourcing crude from Iran, which had traditionally been one of India’s largest oil suppliers owing to its geographical proximity, lower freight costs and attractive pricing. As long as we are sure that there would be no sanctions against SBI or any other bank that may participate in such transactions, there is no reason why India should not buy from the country,” a source tracking the matter told businessline.
Indian refiners had stopped buying Iranian oil after US sanctions were reimposed in 2019.
On June 22 this year, following the interim peace deal between Iran and the US, OFAC issued a waiver that paused major US sanctions on Iranian oil and petrochemicals till August 21.
An attractive option
With sanctions temporarily eased, Iranian crude is expected to be available at a discount, making it an attractive option for Indian refiners looking to diversify supplies and reduce import costs.
However, companies are awaiting greater clarity from OFAC on the banking channels permitted for settlement under the general licence, the source said.
While there are currently no restrictions on the currencies that may be used for payments, refiners are keen to understand which banks would be authorised to handle transactions and the payment mechanisms they would prefer before proceeding with purchases.
“The banking framework is the key operational issue now. Once there is clarity on the banks that can participate and the payment arrangements, refiners can take a commercial call,” a source said.
Several intermediaries and trading firms have already approached Indian refiners with offers of Iranian crude following the US decision, reflecting expectations that demand from former buyers could revive during the 60-day window.
Before sanctions were tightened, Iran was among India’s top three crude suppliers. Its proximity to India’s west coast translated into significantly lower shipping costs compared with supplies from many other parts of the world while Tehran often offered favourable commercial terms to Indian buyers.