India to Continue Iranian Oil Imports after US Sanctions

Top industry sources said Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have contracted 1.25 million tons of Iranian oil for import in November, the month when the US sanctions against Iran's oil sector will kick in, the Economic Times reported. 

While India wants to continue importing Iranian oil, US Secretary of State Mike Pompeo last month said Washington would consider waivers on the embargo but made clear that these would be time-limited, if granted.

Sources said IOC is importing the "usual" monthly volumes of oil from Iran. It had planned to import 9 million tons of Iranian oil in the 2018-19 fiscal (April 2018 to March 2019) or 0.75 million tons a month.

US sanctions against Tehran will become effective from November 4, which will block payment routes.

Sources said India and Iran are discussing reverting to rupee trade after November 4.

"Iran has been off-and-on taking rupee payments for oil it sells. This rupee it uses for paying for imports of medicines and other commodities. A similar arrangement is in works," a source said.

Details of the payment mechanism would emerge in the next few weeks, he said.

Oil refiners such as state-owned IOC and MRPL could use UCO BankNSE -1.76 % or IDBI BankNSE 0.79 % to route oil payments to Iran, sources said.

India had planned to import about 25 million tons of crude oil from Iran in the current fiscal, up from 22.6 million tons imported in 2017-18. But the actual volumes imported may be far less as companies like Reliance IndustriesNSE -6.54 % have totally stopped buying oil from Iran and others too are scaling it down in hope of winning a sanction waiver from the US.

On May 8, the US president pulled his country out of the Joint Comprehensive Plan of Action (JCPOA), the nuclear deal that was achieved in Vienna in 2015 after years of negotiations among Iran and the Group 5+1 (Russia, China, the US, Britain, France and Germany).

Following the US exit, Iran and the remaining parties launched talks to save the accord.

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