The Ministry of Petroleum & Natural Gas (MoPNG) said on Saturday that Indian refiners have sourced crude oil from Iran, marking the first such purchase from the Persian Gulf nation after May 2019.
The development comes after the US un-sanctioned Iranian crude oil as the intensifying West Asian conflict prolonging the closure of the Strait of Hormuz (SoH) has choked out 20 per cent of the global consumption.
Besides, a very large gas carrier (VLGC) also delivered 44,000 tonnes of Iranian liquefied petroleum gas (LPG) to India on Thursday.
Refuting news reports and social media posts on an Iranian crude cargo diverted from Vadinar to China due to payment issues, the Ministry reiterated that India’s crude oil requirements remain fully secured for the coming months.
The news reports and social media posts of an Iranian crude cargo being diverted from Vadinar, India to China due to “payment issues” are factually incorrect. 🇮🇳India imports crude oil from 40+ countries, with companies having full flexibility to source oil from different sources…
— Ministry of Petroleum and Natural Gas #MoPNG (@PetroleumMin)
India imports crude oil from more than 40 countries, with companies having full flexibility to source oil from different sources and geographies based on commercial considerations, Oil Ministry emphasised.
“Amid Middle East supply disruptions, Indian refiners have secured their crude oil requirements, including from Iran; and there is no payment hurdle for Iranian crude imports, contrary to the rumours being circulated,” it added.
Claims on vessel diversion ignore how oil trade works. Bills of Lading often carry indicative discharge port destinations and on-sea cargoes can change destinations mid-voyage based on trade optimisation and operational flexibility, it explained.
“On LPG too, some claims being made are incorrect as LPG vessel Sea Bird carrying around 44,000 tonnes Iranian LPG berthed at Mangalore, India on April 2 and is currently discharging,” the Ministry added.
India utilises the Rupee payment mechanism between UCO Bank and Iran’s non-sanctioned banks having Vostro accounts with the former for payments. This was done after US and EU sanctions restricted dollar-based transactions.
India stopped buying crude oil from Iran after sanctions were re-imposed on the country by the US in November 2018 giving India six-months to wind down imports (May 2019). Iran was India’s third largest crude oil supplier in 2017, accounting for roughly 12-13 per cent of the total imports. At one point, Tehran was supplying more than 425,000 barrels per day (b/d) to New Delhi.
Iran sanctions
Sanctions imposed by the US and the European Union (EU) at the end of 2011 and during the summer of 2012, respectively, led to the displacement of more than 1 million barrels per day (mb/d) of Iranian crude oil on the global market, as per the US EIA.
In 2011, prior to sanctions, Iran exported 2.6 mb/d, most of which went to Asia, particularly China (550,000 b/d), India (320,000 b/d), Japan (315,000 b/d) and South Korea (250,000 b/d).
Although Iran supplied crude oil and condensates to a variety of countries in Europe and Asia in 2017, it sent all of its crude oil and condensate exports to China, Syria, the UAE and Venezuela in 2023. While most of these export volumes have export destinations listed as China, in many cases the destinations are listed as unknown, but US EIA assesses them to be destined for China.
For 2018 and 2019, these (barrels) specifically are listed as unknown, while in 2020 through 2023 these destinations also include Malaysia, Singapore, Vietnam, and destinations listed “unknown,” which US EIA has confirmed are all ultimately destined for China.