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Global Oil Market Surprisingly Oversupplied

Global Oil Market Surprisingly Oversupplied

Despite OPEC oil production cuts…

India’s Reliance Stops Importing Iranian Crude

India oil storage

Reliance Industries has stopped importing Iranian crude oil ahead of U.S. sanctions against Tehran that enter into effect on November 4, a senior company official told Reuters. He added that the company had increased its intake from other Middle Eastern producers and the United States to compensate.

It’s no wonder Reliance has stopped importing Iranian crude. One of India’s biggest industrial conglomerates with a substantial international presence has exposure to the U.S. financial system that it needs to reckon with, therefore limiting the chance of violating U.S. sanctions that would close its access to U.S. banks. Earlier this year, an unnamed source from the company had told Reuters that insurers working with Reliance had also advised it to stop buying Iranian crude.

However, other refiners expect India to score a waiver from the sanctions with the U.S. Treasury. The Managing Director of Mangalore Refinery and Petrochemicals, a subsidiary of India’s Oil and Natural Gas Corporation (ONGC), said the company expected India to receive a waiver as early as this month.

“It is important for India to get some barrels of crude from Iran otherwise if Saudi and major producers are not able to jack up their production, it will impact prices,” Reuters quoted Venkatesh as saying on the sidelines of an India energy forum.

Mangalore Refinery and Petrochemicals will be looking to purchase crude oil from Iraq to replace oil from Iran, the official said. It will not be the only one, either.

India wants to keep importing oil from Iran, because Tehran offers some discounts and incentives for Indian buyers at a time when the Indian government is struggling with higher oil prices and a weakening local currency that additionally weighs on its oil import bill.

What’s more, good bilateral relations with Tehran are important to India over the long term as several government officials have made clear in the past few months during the prolonged U.S.-Indian discussions on the oil import topic.

By Irina Slav for Oilprice.com

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