The state refiners in India, the world’s third-largest importer, have not shown willingness to purchase Iranian crude that has now been ‘unsanctioned’ by the U.S. for a month, amid concerns about shipping, insurance, and payments, sources with knowledge of the situation told Bloomberg on Tuesday.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) on Friday issued a general license, which basically authorizes until April 19 imports of Iranian crude loaded on vessels as of March 20.
India, which stopped importing Iranian crude in 2019 to comply with the U.S. sanctions, is now scrambling for crude supply as its imports from the other Middle Eastern producers account for about half of all its crude purchases.
However, refiners are hesitant to take on the Iranian crude they have been pitched in recent days, as concerns about the payment, currency, and shipping currently outweigh their willingness to entangle themselves into a trade that could become illegitimate again in just a few weeks.
India, however, is snapping up Russian crude, which the Trump Administration also temporarily ‘unsanctioned’ as part of the efforts to lower the price of oil (and U.S. gasoline).
India is currently winning the competition with China to attract Russian crude cargoes with vessels turning mid-voyage away from their previous Chinese destinations and heading for India, as the U.S. waiver on purchases of Russian crude on tankers and the Middle East supply shock drive Indian refiners back to buying Russia’s oil.
India’s hesitancy about buying Iranian crude is not too different from the one shown among some of China’s top state refiners. For example, Sinopec, Asia’s biggest refiner by capacity, is weighing the potential risks of Iranian oil trade and “basically won’t buy” Iranian crude, the company’s president Zhao Dong said on Monday.
Analysts and sanctions experts note that the license to buy Iranian crude loaded on vessels is unlikely to attract a different slate of customers than the typical Chinese teapot customer, due to the other Iran-related sanctions still in place and the uncertainty how low this waiver – currently until April 19 – would last.
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