New Delhi: As a temporary US sanctions waiver revives the prospect of large-scale Iranian crude imports into India once again, Indian refiners expect Tehran to offer sweeter terms—deferred payments, longer credit periods—to regain share in the world’s third-largest oil-consuming nation, three people aware of the development said.
As Indian refiners await clarity in terms of payment mechanism and long-term durability of the US-Iran peace talks, they may not rush for immediate procurement of Iranian crude and are taking a more long-term approach, to ensure supplies when the sanctions are permanently waived off, these people added.
The developments follow a 60-day sanctions waiver issued by the US Treasury Department’s Office of Foreign Assets Control (OFAC) on 22 June, permitting the production, sale and transport of Iranian crude and petroleum products until 21 August 2026.
To be sure, India imported about 133,000 barrels per day of Iranian crude in April following an earlier 30-day sanctions waiver announced in March, according to data from trade intelligence firm Kpler, indicating that some trade flows had resumed for a brief period.
Before US sanctions hit in 2019, Iran was among India’s top five crude suppliers. It shipped 22.1 million tonnes of oil to India in FY10—about 14% of the country’s total imports—and remained a key source of crude for much of the following decade.
Today, however, Iran is seeking to re-enter a market crowded with increasing supplies and West Africa, while Russian crude continues to dominate India’s import basket with discounts of up to $5 a barrel, said an executive with a refiner, requesting anonymity.
According to this executive, while Iranian crude remains logistically convenient and familiar to Indian refiners, any return will depend on commercial attractiveness, including concessions such as longer credit periods, along with stable supplies and clarity on the payment mechanism.
Before sanctions, Iran offered credit periods of up to 90 days, compared with the roughly one-month terms typically extended by suppliers from Saudi Arabia and the UAE.
“With growing supplies, it may soon become a buyer’s market where Iran would look at giving concessions including deferred payments with a long tenure, even if not as high as 90 days, and even discounts to compete with other suppliers,” a former executive with a state-run oil refiner said, also requesting anonymity.
The International Energy Agency (IEA) that global crude oil supply is set to rebound by 8 million barrels per day (bpd) next year—after falling by 3.9 million bpd to 102.4 million bpd this year due to the West Asia war. That could potentially strengthen the bargaining power of buyers further.
Some experts suggested that refiners would be cautious regarding immediate purchases and long-term contracts as the US-Iran peace talks play out, and would rather look at ramping up product imports such as those of liquefied petroleum gas. They would also be looking at feasibility of the trade and technical configuration of refineries and the payment mechanism.
Iranian petroleum minister Mohsen Paknejad is currently in India for the Brics energy ministers’ meet. On Thursday, he met Union petroleum and natural gas minister Hardeep Singh Puri and in the hydrocarbon sector. Iran is interested in selling more crude oil to India including products such as LPG.
It is not immediately clear whether both countries discussed the purchase of crude oil and products during the 60-day sanctions reprieve period. However, one of the people aware of the developments said there is not much clarity on the payment terms for buying energy commodities from Iran.
Taking to X, Puri said: “Met H.E. Mohsen Paknejad, Minister of Petroleum of Iran, on the sidelines of BRICS Energy Ministers’ Meeting. We explored opportunities to cooperate in the energy sector. India remains committed to enhancing energy security through dialogue, partnership and mutually beneficial engagement.”
Queries sent to the Union ministry of petroleum and natural gas, Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, National Iranian Oil Co., and the Embassy of the Islamic Republic of Iran remained unanswered till press time.
Industry observers say Tehran has already begun signalling its intent to compete more aggressively for Asian buyers.
Iran, which charges a premium from Asian buyers, like other key OPEC members, cut its July crude oil premium for Asia to $7.15 a barrel above the Oman/Dubai benchmark average, down sharply from the $13 per barrel premium charged in June.
That would make Iranian crude more competitive against supplies from Saudi Arabia, which also cut its official selling prices for Asia in July but still charges a higher premium of $9.5 a barrel above the Dubai-Oman benchmark.
Sumit Ritolia, senior manager, modelling at commodities analytics and trade intelligence firm Kpler said: “Refiners considering Iranian crude will focus on three key factors: the durability of sanctions relief, pricing and discounts, and the availability of payment, insurance, shipping, and logistics mechanisms. Of these, payment remains the biggest hurdle.”
Until about 2011, purchases were largely settled through the Asian Clearing Union mechanism, which was later discontinued. Experts said the OFAC notification’s explicit allowance for US dollar-denominated payments should help facilitate transactions if imports resume at scale.
Sankalp Gurjar, assistant professor (geopolitics and geoeconomics) at Gokhale Institute of Politics and Economics said that the lifting of sanctions on oil supplies from Iran comes as positive news for India, more so as the US president Donald Trump warned of fresh sanctions on , the largest supplier to India currently.
“It is important for India to have a more diversified sourcing. Iran used to be among the top five suppliers previously. Further, in case fresh sanctions are imposed on Russian oil, Iranian supplies may provide much required comfort,” he said.
Additional supplies and more competitive pricing could benefit India, which imports roughly 90% of its crude requirement. The country’s oil import bill stood at about $123 billion in FY26, and every $1-a-barrel increase in crude prices adds roughly ₹18,000 crore to annual import costs.
However, the durability of the peace talks remains a concerning factor. According to Jim Burkhard, vice president and head of research for oil markets, energy and mobility, S&P Global Energy, although the MoU signed by the US and Iran on 17 June may signal the beginning of recovery, it also creates more questions along with answering some of them.
“Iran has promised to provide 60 days of free passage for ships using the Strait of Hormuz, but what happens after that? The durability of the US-Iran deal—which also involves Lebanon—will be challenged by deep levels of mistrust between the two sides. Implementation will not be smooth and steady. The MoU already faces a mixed political reception in the United States,” he said.