India defies US, buying Iranian oil despite sanctions

Roman Schwartz
October 10, 2018

Pradhan admitted Monday he was not sure India would get a waiver.

File image of Dharmendra Pradhan.

India is going to continue buying Iranian oil in November despite the US sanctions, Reuters reported citing sources close to the Indian oil industry. He said that India has its own energy requirements to fulfil.

He added: "We were trying to balance our relationship with the U.S. and Iran, at the same time keeping our energy and security interest in mind".

"We have ordered for our usual quantity of oil", he said.

As reported, Indian Oil Corp will lift six million barrels of Iranian oil while Mangalore Refinery and Petrochemicals Ltd ships in three million barrels.

Singh said options for paying for Iranian oil are under discussions.

The country previously held oil in storage at Dalian during the last round of sanctions in 2014 that was later sold to buyers in South Korea and India.

"Even without sanctions also, Iran had been accepting payments in rupee". "State's been pushing very hard on this, they deserve a lot of credit for their efforts, so let's see what they come up with before criticizing".

"Chatter that Saudi Arabia has replaced all of Iran's lost oil" is weighing on prices, said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

But Innes warned that limited spare production to deal with further supply disruptions meant "the capacity is quickly declining due to Asia's insatiable demand". It had planned to import 9 MT of Iranian oil in 2018-19 financial year or 0.75 MT a month.

Iran has questioned whether the market needs more oil and says its output is holding steady at about 3.8 million bpd.

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None of the Iranian crude exported in the first week of October is heading for Europe, according to the Refinitiv data.

"The U.S. appears to be abandoning its tough stance on buyers of Iranian oil", analysts at Commerzbank said.

Nayara Energy, formerly Essar Oil, too is stopping import from the Persian Gulf nation.

The catalyst for crude prices for getting tighten was the worries about tighter supply conditions once Washington's sanctions against Iran's crude oil exports kick in beginning in November. These are the two factors affecting oil prices.

UCO Bank and IDBI Bank have been identified to route the payment as the two have no exposure to the U.S. financial system.

"These officials are planning to announce that it's OK to give banks waivers because re-imposed sanctions on businesses are sufficient", the source explained.

Currently, India pays its third largest oil supplier in euros using European banking channels.

"Instead they're talking about 'sufficient pressure, ' which is their language for allowing banks to keep Iran connected to the global financial system, including through SWIFT or with oil waivers", the source said, referring to new efforts by officials in the Treasury Department and European allies to keep Iran connected to the premier worldwide banking system. "Iran's oil can not be replaced by Saudi Arabia nor any other country", Zanganeh was quoted as saying on his ministry's website. Last applied from 2012 to 2015, the sanctions are in retaliation for Iran's supposed nuclear proliferation program.

We've known for month's that the crude oil market is fragile at this time and that any supply disruption could fuel another leg up in the rally.

At the same time, United States crude oil stocks are on the rise.

Under Cost, Insurance and Freight (CIF) mode of shipping, the seller assumes the responsibility of transportation and insurance.

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