Tehran’s Oil Sales to India Resume After Over Two-Year Gap

In a move that signals a partial easing of international sanctions on Iran, Indian refiners have purchased oil from the country for the first time since May 2019. This development marks a significant turnaround in India’s oil imports from Iran, which had been halted due to concerns over the nuclear deal’s collapse and subsequent reintroduction of US sanctions.

According to Indian refiners, the state-owned Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) have purchased approximately 1.25 million barrels of Iranian oil in March, with shipments scheduled to arrive in Indian ports next month. The recent purchases are reportedly linked to the United Arab Emirates (UAE) as an intermediary, following a payment mechanism allowed by a US waiver in 2020 that permits Indian refiners to continue buying Iranian oil while making payments in foreign exchange through a third country.

Indian Oil Minister, Hardeep Singh Puri, confirmed the purchases on Tuesday, stating that India is committed to expanding its energy relationships and is exploring all possible options to boost its crude oil supplies. He also stressed the importance of diversifying India’s oil imports, which remain heavily reliant on imports from the Middle East.

Since November 2018, when the US withdrew from the Joint Comprehensive Plan of Action (JCPOA) or the Iran nuclear deal, India has significantly reduced its oil imports from Iran to avoid facing US penalties. In fact, India’s oil imports from Iran plummeted from an average of 18 million barrels per month in the first half of 2018 to as low as 1.2 million barrels per month in 2019.

However, with a new JCPOA expected to come into effect in March 2023, and following diplomatic efforts from European countries, US sanctions on Iran have been relaxed, paving the way for international oil companies to return to the Iranian market.

This development bodes well for India’s oil imports and may boost relations between New Delhi and Tehran at a time when India seeks alternative energy sources to maintain its rapid economic growth.