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As U.S. sanctions on Iran are about to kick in later this year, Indian oil refiners reduced their orders for Iranian crude oil in June by 12 percent compared to May, India’s Oil Minister Dharmendra Pradhan said in Parliament on Monday.
Some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, and have started to reduce purchases from Tehran.
Yet, last month’s Indian imports from Iran were still higher than imports in June 2017, when Indian refiners had slashed imports from Iran, in a possible retaliation for Tehran not awarding the development of a gas field in Iran to Indian firms.
“Indian refineries imported 1.9 million tonnes of crude oil from Iran in June 2017 and placed orders for 2.82 million tonnes in June 2018,” Reuters quoted Pradhan as telling the lower House of Parliament today.
After the snub in the previous Indian fiscal year, in the current fiscal year beginning in April, India has increased oil imports from Tehran. Iran overtook Saudi Arabia as India’s number two oil supplier in the April-June quarter, with Iraq holding onto its number-one supplier spot.
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Iran is eager to continue to sell its crude 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. So Iran has started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have refused to cover oil cargoes from Iran in the face of the returning U.S. sanctions.
Last week, Hindustan Petroleum was said to have cancelled a crude oil shipment from Iran after its insurer refused to provide coverage for the cargo on concern about U.S. sanctions.
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.