Indian state refiner Bharat Petroleum Corp has requested an extra one million barrels of oil from the National Iranian Oil Co. (NIOC) for June, two industry sources said, amid a looming threat of stringent US sanctions.
The move by BPCL indicates that refiners will try to frontload their purchases from Iran ahead of a November US deadline for re-imposing sanctions on the country’s petroleum sector.
Uncertainties cloud Iran’s oil exports after US President Donald Trump abandoned a 2015 nuclear agreement this month and ordered the re-imposition of US sanctions on Tehran.
Some sanctions take effect after a 90-day “wind-down” period ending on Aug. 6, and the rest, notably on the petroleum sector, after a 180-day “wind-down period” ending on Nov. 4.
“At this point of time Iranian crude is attractive ... it is faring better than spot cargoes and other crudes,” said one of the sources.
Iran has agreed to provide almost free shipping to Indian refiners in 2018/19, an incentive that significantly reduces the landed cost of Iranian oil compared to rival regional grades.
“When the going is good, BPCL thought it should take it,” this source said.
BPCL did not respond to Reuters’ request for comment.
India is Iran’s top oil client after China and was one of the few nations that continued to trade with Tehran during the previous round of Western sanctions as New Delhi follows only the restrictions imposed by United Nations.
So far India’s oil imports and payment mechanism have not been hit by the threat of US sanctions.
India’s Reliance Industries Ltd, owner of the world’s biggest refining complex, plans to halt oil imports from Iran, two sources familiar with the matter said this week, in a sign that new US sanctions are forcing buyers to shun oil purchases from Tehran. Reliance’s move is expected to take effect in October or November.
Delegation to Europe
An Indian delegation with officials from the finance, petroleum and foreign ministries will visit European nations for a week from Monday to explore ways to continue to trade with Iran despite US sanctions, a government official said.
European states have been scrambling to save the 2015 nuclear deal and planning a package of economic relief to persuade Iran to stay in the deal.
“Europe has taken a position, which is different this time. This time we are in the same boat,” this official said.
The Indian delegation would visit France, Germany, Britain and Brussels to meet governments and bankers. Currently India settles oil payments in euros through Germany’s EIH Bank.
“(It’s) not only oil imports, we (European nations and India) are also impacted by concomitant things like banking. We will discuss all these and the way forward,” the official added.
The Indian delegation’s trip to Europe follows the visit of Iranian Foreign Minister Javad Zarif to India this week. India and Iran want to continue their bilateral trade.