India defies US, buying Iranian oil despite sanctions

Irving Hamilton
October 10, 2018

This follows a decision by US President Donald Trump to withdraw from a nuclear deal that Washington - together with Britain, France, Germany as well as Russian Federation and China - signed with Iran in 2015.

"We do not know if we will get waiver [from USA sanctions] or not", Pradhan said while speaking at The Energy Forum in New Delhi.

File image of Dharmendra Pradhan.

USA sanctions on Iran's crude oil exports are due to come into effect from November 4, after being imposed with the aim of stopping Tehran's ballistic missile programme and its involvement in Syria and Iran conflicts. He said that India has its own energy requirements to fulfil.

Saudi Crown Prince Mohammed bin Salman told Bloomberg on Friday that Saudi Arabia "did (its) job and more" by making up for the recent drop in Iranian oil sales.

"We have ordered for our usual quantity of oil", he said.

"Refiners have placed November nominations to lift 1.25 million tonnes (about 9 million barrels) of oil from Iran", one of the sources said.

"Such exaggerations might please Mr Trump, but the market will never believe them", Bijan Namdar Zanganeh said, according to the oil ministry's SHANA news site.

This new stance is triggering criticism from some Iran hawks and comes amid disparate statements about the administration's willingness to grant other concessions, such as preserving Iran's access to worldwide financial markets, as the Free Beacon first reported on Monday. It uses rupee for paying for imports of medicines and other commodities. "On the other hand, Iran sanctions are only weeks away". This likely means we won't see any serious buying this week unless the price is right.

United States sanctions on Iranian oil purchases are due to take effect on November 4.

Singh said International Olympic Committee is importing the "usual" monthly volumes of oil from Iran. It further added that this is the longest streak of weekly cuts since October a year ago.

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Oil prices rose about one percent on Tuesday on growing evidence of falling Iranian crude exports before the imposition of new US sanctions, as well as a partial production shutdown in the Gulf of Mexico because of Hurricane Michael.

Nayara Energy, formerly Essar Oil, too is stopping import from the Persian Gulf nation.

While the persistent fear of a supply shortfall triggered by sanctions on Iran coming into effect by early November had provided the market the thrust upwards, the huge flow of speculative capital prompted by worries over supplies has created huge net-long futures positions for financial investors which has exerted an exaggerated price action.

"In particular, both India and China continued to import crude from Iran, even though they had to cut down volumes significantly".

"These officials are planning to announce that it's OK to give banks waivers because re-imposed sanctions on businesses are sufficient", the source explained. These channels would get blocked from November. It began clearing the dues in 2015 when the restrictions were eased.

Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions.

"The downward revisions reflect to an important extent the worsening of growth prospects for Iran, following the re-imposition of USA sanctions", it said.

According to an executive order (EO 13846) issued by President Donald Trump, all American and non-American entities were given a six-month "wind-down" period from May 2018, in which to "zero out" all transactions with designated Iranian oil companies and port operators.

The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. In 2013-14 and 2014-15, India bought 11 MT and 10.95 MT respectively from it.

The best value zone for the November WTI crude oil market is $72.35 to $71.27.

Under Cost, Insurance and Freight (CIF) mode of shipping, the seller assumes the responsibility of transportation and insurance.

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