Three oil industry sources said that traders offered Iranian oil to Indian refiners at a premium above the price of Brent crude on the Intercontinental Exchange after Washington temporarily lifted sanctions to ease the energy crisis resulting from the US-Israeli war on Iran.
India, the third largest importer and consumer of oil in the world, has not received any shipment from Tehran since May 2019 after being subjected to American pressure not to buy Iranian crude.
But India has been hit hard by the disruption of energy shipments through the Strait of Hormuz due to the war on Iran, which has now entered its fourth week.
The sources said that its refineries have a month to maximize their purchases of oil and liquefied petroleum gas from Iran, which is geographically close to India. Indian refiners have already bought millions of barrels of Russian oil after the United States lifted sanctions imposed on them in an attempt to curb rising oil prices.
Apart from the oil shortage, India faces a severe shortage of liquefied petroleum gas, which is primarily used for cooking purposes.
Payments are in dollars or even rupees
Traders and the National Iranian Oil Company are seeking payments in dollars, the sources said, adding that some parties are ready to accept payments in Indian rupees.
The identity of the sources could not be revealed because they are not authorized to speak to the media.
Fatih Birol, Executive Director of the International Energy Agency, said on Monday that the current energy crisis is worse than the two oil shocks of the 1970s combined.
US Treasury Secretary Scott Besent said the Trump administration on Friday issued a 30-day sanctions waiver to purchase Iranian oil already at sea.
The exemption applies to oil loaded on any ship, including sanctioned tankers, on or before March 20, and unloaded by April 19, according to OFAC.
Sources said that Iranian oil was offered at a premium of between $6 and $8 per barrel over Brent crude, with payment being settled within seven days of the shipment’s arrival.
They added that Indian refiners want to confirm the payment mechanism before signing any agreement with the National Iranian Oil Company because Iran is isolated from the SWIFT payment system.
Any decision to buy Iranian fuel would be a “technical commercial decision” on the part of oil companies, Sujata Sharma, joint secretary in the Union Petroleum Ministry, told reporters at an energy conference.
