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.
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