India's Oil Imports From Iran Slump 60% In February

Lamar Ellis
March 15, 2019

This comes after USA sanctions on its oil and shipping industries scared Western banks, insurers, and commercial shipping operators, Reuters reported, citing sources from Iran and from Western countries. Washington is pressuring Iran to curtail its nuclear program and stop backing militant proxies across the Middle East. The United States surprised global oil markets in November a year ago by allowing eight countries to keep importing Iranian oil.

And with few buyers now willing to take all the commercial risks involved in oil sales, Iran is also having to cover the shipment of cargoes, including securing insurance in most instances, shipping sources said.

The US reimposed sanctions in November after pulling out of a 2015 nuclear accord between Iran and six world powers.

Iran has more than 50 tankers, but this month, for example, it's using 12 of those to store oil in floating storage at sea, according to MarineTraffic data cited by Reuters.

Iran was hoping to sell more than 500,000 bpd of oil to India in 2018/19, its oil minister Bijan Zanganeh said previous year, and had offered nearly free shipping and an extended credit period to boost sales to the country.

Talks with Washington on extending the waiver slowed due to the U.S. government shutdown in January, officials said.

According to one shipping source, Iran has been searching for more ships in Vietnam and two sources said it had also been looking for middlemen in the Greek market, one of the main hubs for second-hand ship deals.

Brent crude settled at $67.55 a barrel on Wednesday.

While the latest talks on waivers aimed for a reduction in exports, the sources said the administration remained committed to a complete halt in the future.

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"We're committed to bringing Iranian crude oil exports to zero as quickly as market conditions will permit", Pompeo said in a speech at IHS Markit's CERAWeek conference in Houston, where United States oil and gas executives, energy luminaries and officials of the Organization of the Petroleum Exporting Countries gather annually to discuss global energy development.

Trump "has made it very clear that we need to have a campaign of maximum economic pressure" on Iran, Hook said, "but he also doesn't want to shock oil markets". "But we also know that there are a lot of variables that go into a well-supplied and stable oil market", said Hook, a senior policy adviser to U.S. Secretary of State Mike Pompeo.

"On the numbers part, we'll get an updated assessment as we get closer to the end of the 180 day period", of the first round of waivers that ends in May, the spokesperson said.

India has been allowed by Washington to continue to buy about 300,000 bpd oil or 9 million barrels in a month till early May. They were China and India, along with Japan, South Korea, Taiwan, Turkey, Italy and Greece. Since India also buys a lot of oil from Venezuela, the USA will struggle to convince India that it can do without much of its oil imports unless a new supplier emerges from thin air. China has already openly said they'll keep buying oil with or without United States permission, and India is also seen likely to keep doing so simply out of necessity.

Iran has been in discussions with South Korea to purchase several new super tankers, but the talks have gone nowhere as of yet.

The administration would likely struggle to cut Iran's exports much below 1 million bpd due mainly to strong demand from China, India and Turkey, said Amos Hochstein, who was in charge of Iran sanctions as the top U.S. energy diplomat under former President Barack Obama.

Iran, a member of the OPEC, exported nearly 3 million bpd of oil at its pre-sanctions peak.

He said he expects China and India purchases alone to account for around 800,000 to 900,000 bpd.

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