India has given permission to state-owned refiners to import oil from Iran with Iranian tankers and insurance, after the biggest Indian shipping company backed out of Iran voyages due to the U.S. sanctions, sources told Reuters, in a sign that India may not cut off Iranian oil imports after the sanctions return.
The Shipping Corporation of India (SCI) has stopped Iranian oil trade because of lack of insurance cover, a source in the company told Reuters, while a government official said that India’s shipping ministry has allowed state refiners to import Iranian oil on the so-called cost, insurance, and freight (CIF) basis, under which Iran would provide the shipping and the insurance for the oil cargoes.
Iran eager to continue selling its oil to India—its second-largest single oil customer after China—even as some Indian refiners are said to be thinking of reducing oil imports from Iran for fear of running afoul with the U.S. sanctions and having their access cut off to the U.S. financial system. Earlier this summer, reports had it that Iran had started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers backed out of covering oil cargoes from Iran.
Refiners and oil traders in China, Iran’s top oil customer, have reportedly started to switch to using Iran-owned tankers for almost all their crude oil imports from Tehran.
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China has said that it would not stop buying Iranian oil despite U.S. efforts to bring the Iranian exports down to ‘zero.’ But Beijing is also said to have agreed not to increase its oil purchases from Iran.
India, for its part, has been torn between cutting itself—and its refiners—off from the U.S. financial system by continuing to import Iranian oil, and keeping cheaper Iranian oil imports flowing. India is expected to finalize its strategy regarding Iranian oil purchases after a meeting with top U.S. officials on Thursday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.