Traders have offered Iranian oil to Indian refiners at a premium to ICE Brent after Washington temporarily removed sanctions to ease the energy crisis caused by the US-Israeli war on Iran, news agency Reuters reported, citing three industry sources. The report also claimed the traders offered New Delhi to make payments in Indian rupees.
India, the world's third-biggest oil importer and consumer, has not received a cargo from Tehran since May 2019 after it came under US pressure not to buy Iranian crude. But India has been hit hard by the disruption of energy shipments via the Strait of Hormuz caused by the war in Iran, which is now in its fourth week. Its refiners have a month to maximise purchases of oil and liquefied petroleum gas from Iran, which is geographically close to India, the sources told the news agency.
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Indian refiners have already bought millions of barrels of Russian oil after the US lifted sanctions on it to try to curb the surge in oil prices. Apart from a lack of oil, India faces a severe shortage of LPG, primarily used for cooking.
Payment in dollars or even rupees
Traders and the National Iranian Oil Co are seeking payments in dollars, the Reuters quoted sources as saying, adding that some parties are even willing to accept payments in Indian rupees. India has paid for Iranian oil in Indian rupees primarily, from 2012–2013 and again around 2018–2019. India used a rupee-payment mechanism, often involving UCO Bank, to settle oil dues, largely to navigate US sanctions that blocked dollar payments.
The Trump administration on Friday issued a 30-day sanctions waiver for the purchase of Iranian oil already at sea, US Treasury Secretary Scott Bessent said. The waiver applies to oil loaded on any vessel, including tankers under sanctions, on or before March 20 and discharged by April 19, according to the Office of Foreign Assets Control. Reuters sources said Iranian oil has been offered at a premium of USD 6-USD 8 per barrel over ICE Brent, with payment settled within seven days of cargo arrival.
Indian refiners want to be sure about the payment mechanism before signing any deal with NIOC, as Iran is cut off from the SWIFT payment system, they added. Sujata Sharma, a joint secretary in the federal oil ministry, told reporters at an energy conference that any decision to buy Iranian fuel would be "a techno-commercial decision" on the part of the oil companies.
(With inputs from Reuters)