The subcontinent is currently the second-largest buyer of oil from the Islamic Republic
India to halt oil imports from Iran in November
India is not planning to buy any crude oil from Iran in November, raising the prospect that Tehran will lose another major customer as US sanctions come into effect.
Indian Oil and Bharat Petroleum have not asked for any Iranian cargoes for loading in November, according to officials at the companies. Nayara Energy also does not plan any purchases, said an industry executive. Mangalore Refinery and Petrochemicals hasn’t made any nominations for that month, but may do so later, a company official said.
Final decisions on purchases are not due until early October, so the refiners could still change their minds. The company officials and industry executive asked not to be named citing internal policies.
India is the second-largest buyer of Iranian oil, having imported an average of 577,000 barrels a day this year, or about 27 per cent of the country’s exports, according to Bloomberg tanker tracking data. With South Korea, Japan and European nations also cutting imports to zero, the loss of the Indian refiners, even if temporarily, is a major blow for the Islamic republic.
At the same time, the US sanctions that are due to go into effect in early November are creating a major gap in the global oil market just as Brent crude hits a four-year high above $80 (Dh293) a barrel. Mercuria Energy and Trafigura, among the world’s biggest trading houses, are predicting the loss of Iran’s supply will boost prices to $100 a barrel for the first time since 2014.
That risk has been echoed by some of the world’s biggest oil companies. BP chief executive Bob Dudley sees the sanctions on the Opec nation having a bigger impact on the market this time than the previous round of restrictions six years ago.
US President Donald Trump’s administration is taking a harder stance. It wants all oil imports from Iran to end by November, and it’s unclear if any waivers will be granted. In previous sanctions under Barack Obama, the government had allowed nations to continue purchases at reduced levels.
The tougher attitude is already showing in Iranian barrels vanishing from the market. South Korea became the first of Iran’s top-three oil customers to heed the US diktat by refraining from any purchases last month. Japanese refiners have also temporarily halted loadings.
India and China had held out hope for Iran. It was only about four months ago that India’s foreign minister said that the country will not adhere to unilateral restrictions and will continue buying Iranian crude. China also made similar comments and was said to have rejected an American request to cut imports.
When Mr Trump in May announced plans to reimpose sanctions on Iran’s oil exports, the market estimated a cut of about 300,000 to 700,000 barrels a day, Trafigura’s co-head of oil trading Ben Luckock said this week. However, the consensus has now moved to as much as 1.5 million barrels as the US is “incredibly serious” about its measures, he said.