NEW DELHI: India’s state refiners are holding back from buying US-sanctioned cargoes of Iranian oil despite a new sanctions waiver, as logistical, financial and regulatory uncertainties outweigh the near-term opportunity.According to a Bloomberg report, the hesitation comes after the United States on Friday issued a one-month waiver, allowing countries to buy Iranian crude that is already “in the water,” in a bid to ease global oil prices. However, state refiners are skeptical of this purchase. Unresolved issues related to shipping, insurance and payment mechanisms have collectively prevented any deal from materializing.
At the heart of the reluctance is the tight waiver schedule.In terms of oil trading, a 30-day window is considered insufficient to negotiate contracts, complete due diligence, arrange financing, secure insurance and execute delivery. Refiners fear that any delay could cause shipments to exceed the exemption period, exposing them to the risk of sanctions.Added to this is a logistical bottleneck. Marine insurance, essential for cargo worth millions of dollars, remains a gray area.Most global insurers operate within Western regulatory frameworks and may be unwilling to underwrite shipments linked to Iran, given the risk of the exemption expiring mid-voyage. Without compensation coverage, tankers may also face rejection at ports, adding another layer of uncertainty.Financial channels present an equally important obstacle. Iran’s limited access to the global banking system, particularly the SWIFT network, has left refiners unclear about viable payment mechanisms. Questions remain about which currency to use, which intermediary banks comply and whether the transactions could trigger future scrutiny. This has slowed down due diligence (the verification process required before entering into such transactions), especially after a five-year gap in transactions.“Issues such as shipping and insurance are unclear, and refiners are unsure about payment mechanisms, currency, insurance and even whether Iran-linked vessels will eventually be accepted at Indian ports,” Bloomberg reported citing sources familiar with the matter.The lack of a formal government framework in New Delhi has further reinforced caution. Refinery executives have indicated that official guidance or a protective policy would make such purchases more viable. In its absence, companies must independently assess legal and operational risks, encouraging a risk-averse approach.This caution reflects sentiment in other major Asian markets. Chinese state-owned company Sinopec has also indicated it would avoid Iranian shipments, citing the narrow delivery window provided for in the waiver.India’s stance is in stark contrast to its previous response to Russian oil waivers. There, established trade routes, payment systems and shipping agreements allowed refiners to move quickly. With Iran, those “plumbing” trade systems have been largely dormant since 2019, when U.S. sanctions halted imports.Historically, Iran was a major supplier to India, accounting for up to 11.5% of total crude oil imports at its peak, according to Kpler data. However, years of withdrawal have eroded operational readiness, making a rapid re-entry to trade difficult.While Iranian sellers and brokers have approached Indian refiners with offers of crude oil and liquefied petroleum gas (an important cooking fuel that is currently in short supply), there has been little progress, even on prices or delivery times.The broader conclusion is that while the US waiver offers a theoretical opening, practical barriers – legal ambiguity, logistical limitations and financial frictions – are proving decisive. For Indian refiners, the risk of becoming embroiled in sanctions complications currently outweighs the benefit of discounted barrels.Unless the waiver is extended or backed by clearer agreements between governments, industry participants expect India to stay on the sidelines, allowing this brief window for Iranian oil to largely go unused.
