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Indian Refiner Cancels Iranian Oil Shipment As Insurance Won’t Cover Cargo

India oil storage

Hindustan Petroleum has cancelled a crude oil shipment from Iran after its insurer refused to provide coverage for the cargo on concern about U.S. sanctions, Reuters reports, citing three unnamed sources familiar with the matter.

Hindustan Petroleum, India’s third-largest state-owned refiner, ordered the 1-million-barrel shipment earlier this month, and after the refusal of its insurance company to cover a cargo loaded on an Iranian tanker, it tried to sell it on but could not find buyers, the sources said.

The Indian refiner imports about 20,000 bpd of Iranian crude, which is a relatively small part of its daily consumption, which amounts to 316,000 bpd, but other Indian refiners could run into the same problem, Reuters notes. Hindustan Petroleum had just renewed its installation insurance when the insurance company refused to cover the cargo and bigger refiners might have to cancel Iranian cargoes, too, if their insurance policies happen to have to be renewed before the November 4 deadline given by Washington to all companies doing business with Iran before sanctions kick in.

India, the world’s fastest-growing economy has been importing Iranian crude at an average daily rate of 588,000 bpd since the start of the year. This makes it Iran’s second-largest client after China, and the nation that is struggling the most as the sanctions’ start date approaches.

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Initially, after President Donald Trump announced the U.S. pullout from the Joint Comprehensive Plan of Action, India took a tough stance, saying it will continue to import crude from Iran as it does not honor unilateral sanctions.

Later, however, as Iranian crude imports into India fell from over 700,000 bpd in May to just 592,800 bpd in June, it began to emerge that despite the government’s stance, refiners were wary of losing their access to U.S. bank financing. Still, like other U.S. allies in Asia, India is looking for a way to secure a sanction waiver so it can continue buying crude from Iran: it is heavily dependent on imported oil, and diversity of supplies is vital for the country.

By Irina Slav for Oilprice.com

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