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Indian Oil Corp, the biggest refiner in India, has purchased a total of 6 million barrels of U.S. crude oil for delivery between November and January, as it has started to look for a replacement of Iranian oil cargoes ahead of the U.S. sanctions on Iran’s oil exports returning in early November.
The 6-million-barrel purchase was the first time that Indian Oil Corp (IOC)—which was the first Indian refiner to buy U.S. oil last summer—has bought U.S. crude oil through a mini-term tender, the Indian company’s Director of Finance A.K. Sharma told Reuters on Wednesday.
IOC is buying 2 million barrels of U.S. Mars for November delivery, one million barrels of Mars and Eagle Ford each in a combination cargo for December delivery, and 2 million barrels of Louisiana Light Sweet (LLS) to be delivered in January next year, Sharma said.
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, according to preliminary tanker arrival data that Reuters has obtained from trade sources.
Iran is 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.
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 last 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.