Indian refiners have made their first purchases in seven years since 2019 amid the Middle East crisis that has disrupted the global oil supply chain, according to Reuters.According to the Petroleum Ministry, India has not received any cargo from Tehran after the US imposed pressure on it to stop the import of crude oil. This marks the latest development in a significant shift in sourcing strategy.Indian refiners have bought Iranian oil amid escalating conflict in West Asia, which has disrupted supplies through the Strait of Hormuz. India, the world’s third-largest oil importer and consumer, has not received a single cargo from Iran since May 2019 after trade was halted due to US sanctions.However, recent disruptions linked to the ongoing US-Israel conflict have tightened global supplies, affecting India’s energy security.In a statement, the ministry said, “Amid Middle East supply disruptions, Indian refiners have met their crude oil requirements, including from Iran; and there are no payment barriers to imports of Iranian crude.”The ministry further assured that India’s crude oil needs will be fully secured for the coming months.
No problem in payment, supply completely safe: Government
Rejecting reports that Iranian oil shipments destined for India were diverted to China due to payment constraints, the government termed such claims as “factually incorrect”.Clarifying the situation, the ministry said, “News reports and social media posts on Iranian crude being moved from Vadinar, India to China due to ‘payment issues’ are factually incorrect.”The ministry said Indian companies enjoy full flexibility in sourcing crude oil.“India imports crude oil from more than 40 countries, companies have complete freedom to source oil from different sources and geographies depending on commercial considerations.”
Why did India stop buying Iranian oil?
Before sanctions were tightened in 2018, India was one of the largest buyers of Iranian crude, importing both Iran Light and Iran Heavy grades due to refinery compatibility and favorable pricing terms.At its peak, Iranian crude oil accounted for about 11.5 percent of India’s total imports. In 2018, India imported about 518,000 barrels of Iranian oil per day.However, imports fell to about 268,000 bpd between January and May 2019 during the sanctions waiver period, before falling to zero after the United States ended the waiver and reimposed sanctions.Since then, India has diversified its sourcing basket, shifting to suppliers in the Middle East, the United States, and most recently, Russia.The waiver is expected to last until April 19, with an estimated 95 million barrels of Iranian oil currently stored on ships at sea.Apart from crude oil, India has also received Iranian liquefied petroleum gas (LPG).The ministry confirmed that a ship carrying about 44,000 metric tonnes of Iranian LPG berthed at the western port of Mangalore on April 2 and is currently discharging fuel.
What could exemption from US sanctions mean for India?
India has not bought Iranian crude oil since mid-2019 after the US withdrew sanctions waivers. However, the current crisis has brought the possibility of limited relief back into focus.About 35-40 percent of India’s crude oil imports pass through the Strait of Hormuz, a route now disrupted due to the ongoing conflict. This has increased the urgency to ensure alternative and reliable supplies for India.To compensate for the potential shortfall, India has increased purchases of Russian crude oil. According to Kpler, the country bought about 30 million barrels of Russian oil in a single week after the conflict escalated.If the US allows limited “uncleared” trade of Iranian oil at sea, it could provide India with another important supply source.Energy experts suggest that India can increase imports rapidly. Sumit Ritolia, Principal Research Analyst, Kpler, highlighted that India has historically been a major buyer due to strong refinery offtake and favorable commercial terms.Speculation about easing of sanctions has reintroduced Iran as a key variable in global oil flows, he said, adding that India could emerge as a major demand hub along with China and other Asian buyers.“India could emerge as a major demand hub with Chinese buyers (state-owned enterprises and large independents) and other Asian countries,” he said.
