Friday, 22 February, 2019

India to keep buying Iranian oil despite U.S. sanctions: Sources - International

Reuven Rivlin with German Chancellor Angela Merkel at the President's residence in Jerusalem Israel Reuven Rivlin with German Chancellor Angela Merkel at the President's residence in Jerusalem Israel
Nellie Chapman | 08 October, 2018, 07:40

The apparent about-face comes after India, the second biggest consumer of Iranian oil after China, announced that it will purchase nine million barrels of product from Tehran in November even as renewed sanctions take effect.

Many analysts said they expected Iranian exports to drop by around 1 million barrels per day. Iran had around 8 million-10 million barrels of crude and condensate on floating storage as of October 3, mostly off its main crude oil terminals. Indian Oil and Mangalore Refinery did not immediately respond to a request for comment.

U.S. oil shipments to India fell to 84,000 barrels per day (bpd) last month, down 75 per cent from a record high of 347,000 bpd in June, Kpler data showed.

Ahead of the sanctions, buyers of Iranian crude, including China and India, have been stocking up inventories from the Middle Eastern country and cutting imports from the US. The official spoke on the condition of anonymity.

The administration is "prepared to work with countries that are reducing their imports on a case-by-case basis", the official said.

Regardless of Russia's reasoning for privately cooperating with the Saudis and the make the effort to starve Iran of its oil exports feasible, it is highly unlikely that either Russian Federation or the Saudis will be able to prevent the coming supply shock after November 4.

Washington wants governments and companies around the world to stop buying Iranian oil to put pressure on Tehran to renegotiate a nuclear deal.

With the European Union considering the creation of a "special objective vehicle" before November to facilitate trade with Iran, India hopes to find a way to settle payments to Tehran.

During the previous sanctions, there was no European channel but this time as Europe has made a decision to delink itself from U.S. on the issue. While Europe has signalled support for the ruling, this raises the prospect of increased trans-Atlantic tensions between the USA and Europe as the European Union prepares a series of mechanisms to enable the continuation of limited payments and trade activity.

India's purchases of USA crude oil have fallen by 75 percent over the past four months as the subcontinent stocks up on Iranian crude, Reuters has reported.

Sri Lanka, a country closely watched by the United States is expected to raise oil prices again by Wednesday midnight under the fuel price formula in line with increasing global prices.

Oil traders say they are concerned that the kingdom isn't ramping up output quickly enough, and that it may not have enough capacity to fully cover Iran's losses.