The Trump administration's reimposition of sanctions against Iran came into effect on Monday, but the US exempted eight countries that can still import oil from Tehran without penalty.
India is among the eight countries exempted from the sanctions. On Saturday, oil minister Dharmendra Pradhan said India and other leading oil buyers will benefit from the waiver the US has granted them from Iran sanctions. But there was plenty of confusion on the issue because of the delay of an official US statement on the exempted countries.
This has pushed the majority of Indian refiners to start reducing or totally stopped imports from Iran. These companies have started looking for alternatives. Bharat Petroleum Corporation Ltd (BPCL) indicated that it had imported nearly 2 million metric tonne (MMT) of crude from Iran, while Indian Oil Corporation Ltd (IOCL) has a contract of around 9 MMT. Hindustan Petroleum Corporation Ltd (HPCL) told CNBC-TV18 that Iran's contribution to the crude basket is really low and will not impact the company.
HPCL and BPCL have completed their contractual obligations, but do not plan on buying any more crude from Iran. IOCL really has not curbed these imports and continues with its ongoing imports.
Chennai Petro has cancelled its October shipments and will not sign any further contracts. Mangalore Refinery and Petrochemicals Limited (MRPL) is also likely to halt purchases and has started looking for alternatives. Refiners such as Reliance have stopped all imports from Iran.
How are Iran imports beneficial?
Iran offers competitive terms to buyers of its oil. Also there is free shipping, extended credit terms of up to 60 days.
While imports from Iran have already fallen substantially, a brokerage says that complete stoppage of Iran crude import could impact the earnings of the oil marketing companies (OMC).
There could be an impact of
The impact of Iran sanctions on Brent prices can be summarised in the graph below:
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First Published: IST