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Ahead of the return of the U.S. sanctions on Iran, India’s state refiners boosted their Iranian oil purchases, pushing up Indian oil imports from Iran by 30 percent from June, to a record 768,000 bpd in July, Reuters reported on Thursday, citing preliminary tanker arrival data it had obtained from trade sources.
The arrivals included some crude oil shipments loaded in June that docked in India in July. State-run refiners accounted for around four-fifths of India’s oil imports from Iran.
India’s oil imports from Iran last month soared by 85 percent from the 415,000 bpd shipments in July 2017, according to the data obtained by Reuters.
This time last year, 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.
But as the new Indian fiscal year began in April, refiners have been taking more Iranian oil imports compared to the previous fiscal year, as Iran offered incentives such as extended credit periods and almost free shipping to keep its market share in India—Tehran’s second-largest oil customer after China.
Iran is also said to have 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 on Tehran.
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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.
India’s imports from Iran could start to slow from August as 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, prompting them to reduce oil purchases from Tehran.
HPCL, for example, will not be buying oil from Iran in August, chairman M. K. Surana told Reuters earlier this week, but did not elaborate on whether the refiner would resume importing Iranian oil after that.
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.