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28 June 2018
 |
| oil(The Total Investment & Insurance
Solutions) |
India’s oil ministry has
asked refiners to prepare for a 'drastic reduction or zero' imports of Iranian
oil from November, two industry sources said, the first sign that New Delhi is
responding to a push by the United States to cut trade ties with Iran. The
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India has said it does not
recognize unilateral restrictions imposed by the US, and instead follows UN
sanctions. But the industry sources said India, the biggest buyer of Iranian
oil after China, will be forced to take action to protect its exposure to the
US financial system.
India’s oil ministry held
a meeting with refiners on Thursday, urging them to scout for alternatives to
Iranian oil, the sources said.
“(India) has asked
refiners to be prepared for any eventuality, since the situation is still
evolving. There could be drastic reduction or there could be no import at all,”
said one of the sources, who has knowledge of the matter.
During the previous round
of sanctions, India was one of the few countries that continued to buy Iranian
oil, although it had to reduce imports as shipping, insurance and banking
channels were choked due to the European and US sanctions. The
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The source said this time
the situation is different.
“You have India, China and
Europe on one side, and US on the other... At this moment we really don’t know
what to do, but at the same time we have to prepare ourselves to face any
eventuality,” said the source.
While a State Department
official has said that Washington wants Iranian oil buyers to halt imports from
November, U.S. Ambassador to the United Nations Nikki Haley has told Prime
Minister Narendra Modi to lessen dependence on Iranian oil. The
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Haley, currently in Delhi,
spoke with US Secretary of State Mike Pompeo early on Wednesday, before meeting
PM Modi.
The US push to curb
countries’ imports of Iranian oil comes after President Donald Trump withdrew
from a 2015 deal between Iran and six world powers and ordered a reimposition
of sanctions on Tehran.
Some sanctions take effect
after a 90-day “wind-down” period ending on Aug. 6, and the rest, notably in
the petroleum sector, following a 180-day “wind-down period” ending on Nov. 4. The
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OUTPUT
BOOST FROM OPEC
Under
pressure from the US sanctions, Reliance Industries Ltd, the operator of the
world’s biggest refining complex, has decided to halt imports.
Nayara
Energy, an Indian company promoted by Russian oil major Rosneft, is also
preparing to halt Iranian oil imports from November after a communication from
the government, a second source said. The company has already started cutting
its oil imports from this month.
Indian
Oil Corp, Mangalore Refineries and Petrochemicals Ltd and Nayara Energy, the
top three Indian buyers of Iranian oil, and the oil ministry did not respond to
Reuters’s request for comments.
Removing
Iranian oil from the global market by November as called for by the United
States is impossible, an Iranian oil official told the semi-official Tasnim
news agency on Wednesday. The Total
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The
options to find replacements to Iranian oil have widened after OPEC agreed with
Russia and other oil-producing allies last week to raise output from July by
about 1 million bpd, with Saudi Arabia pledging a “measurable” supply boost but
giving no specific numbers.
Saudi
Arabia’s plans to pump up to 11 million barrels of oil per day (bpd) in July
would mark a new record, an industry source familiar with Saudi oil production
plans told Reuters on Tuesday. The Total
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The
second source said there were plenty of options available in the market to
replace Iranian oil. “There are companies and traders that are willing to give
you a 60 day credit, crude is available in the market,” the source said.
To
boost its sales to India, Iran recently offered virtually free shipping and an
extended credit period of 60 days. The
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“We
can buy Basra Heavy, Saudi or Kuwait oil to replace Iran. Finding replacement
barrels is not a problem, but it has to give the best economic value,” a third
source said.The Total Investment &
Insurance Solutions
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