On Monday, the United States waived sanctions on Iran for 60 days after the first talks under a nascent peace deal, opening a narrow window for renewed energy trade.
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The approaches to Indian refiners have come directly from National Iranian Oil Co (NIOC) and through intermediaries saying they have been allocated oil by the Iranian state producer, the sources said.
“Apart from NIOC, several traders are contacting us for the sale of Iranian oil. But my priority is to give a chance to NIOC,” said one of the refining sources. The sources declined to be named because the discussions are confidential.
NIOC is telling Indian buyers that Iranian crude would be $3 to $4 a barrel cheaper than similar regional grades on a landed basis, they said.
The traders approaching refiners are mainly from small and mid-sized trading companies based in Singapore and Dubai, the sources said, declining to name them.
Potential supplies of crude and liquefied petroleum gas (LPG) to India were also discussed during Iranian Petroleum Minister Mohsen Paknejad’s visit to New Delhi this week, the sources added.
However, Indian refiners have limited scope to absorb Iranian crude in the near term because most have already secured supplies through August and Middle Eastern term suppliers are pressing buyers to honour annual contractual commitments.
India had already imported Iranian LPG through traders, and those flows could rise under the sanctions waiver, sources said. However, commercial negotiations could take some time because payment mechanisms and banking channels remain unclear.
India received two cargoes of Iranian oil in April after Washington granted a 30-day sanctions waiver, with payments settled in Chinese yuan.
Iran was India’s second-largest oil supplier in the 2010/11 financial year before U.S. sanctions pushed New Delhi to reduce purchases and eventually halt crude imports from Tehran in May 2019.