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India is among the largest importers of Iranian crude oil and the jump in imports comes amid increasing pressure from the United States on Iran’s oil customers to cut purchases, the Economic Times reported.
Cumulatively, oil imports by India from Iran in the first five months (April to August) of the current financial year increased 43.69 percent to 13.32 mt as compared to 9.26 mt imported in the corresponding period a year ago, fresh data sourced from the Directorate General of Commercial Intelligence and Statistics (DGCIS), an arm of the Ministry of Commerce and Industries showed.
In value terms, India imported crude oil valued at $ 1.08 billion from Iran in August alone, as compared to $ 0.52 billion worth of crude imported in the corresponding month last year.
India’s oil import from Iran, in value terms, during the five month period doubled to $ 6.82 billion from $ 3.27 billion worth of imports in the corresponding period last year.
US had in May walked out of the Joint Comprehensive Plan of Action (JCPOA) with Iran and reimposed economic sanctions on the country. The sanctions prohibit other nations to enter into new contracts with Iran immediately and provide a six-month period ending November 4 to wind-down existing commitments with the country, especially with Iranian oil companies.
Economic Times had last week reported Indian refiners will pay for oil from Iran in rupee, using UCO Bank and IDBI Bank channels, beginning November 4 when oil-related sanctions against the Islamic Republic go into effect.
Also, India has offered to cut oil purchase from Iran significantly to secure a waiver from the US to continue its imports.
Indian refiners are currently using State Bank of India (SBI) and Germany-based Europaeisch-Iranische Handelsbank AG to buy Iranian oil in euros, according to a Reuters report.
Iran’s Oil Minister Bijan Namdar Zanganeh has said removing Iran’s oil from the market was not a possibility in the mid-term and US plans of bringing Iran’s oil exports to zero in the short term, even for a month, will not happen.
Zangeneh added that some countries have lowered their oil import from Iran following US pullout of the JCPOA in May, but no country other than South Korea have stopped imports from Iran since then.
India meets over 82 percent of its crude requirement through imports. Around 10-12 percent of these shipments are sourced from Iran.
Indian refiners prefer Iranian crude owing to better pricing and credit terms.
The three-month credit period offered by Iran results in lower working capital for domestic Indian refiners leading to lower borrowings and increased floating money.
Iran’s OPEC Governor Hossein Kazempour Ardebili on Sunday said that no production increase was discussed during Sunday’s meeting of the Joint OPEC – Non-OPEC Ministerial Monitoring Committee (JMCC) in Algiers.
OPEC — together with a group of non-OPEC producers including Russia — started withholding oil supplies up to 1.8 million barrels per day since 2017 to prop up prices and reduce oil inventories.
The cuts, which deepened to 2.8 million barrels per day for the month of May lifted prices from lows of around $ 42.20 per barrel in November 2016 to highs of around $ 80 dollar per barrel in May 2018.
Subsequently, in June this year the group along with its non-OPEC members decided to not to over-comply on production cuts beginning July this year.
Saudi Arabia’s crude oil exports to India declined 1.07 percent to 3.03 mt in August.
In the first five months of the current fiscal (March-August), Saudi Arabia’s oil exports to India rose 8.53 percent to 15.67 mt, DGCIS data showed.
The Arab nation’s overall crude oil exports in April-July 2018 period increased 4.15 percent, according to information published by JODI-Oil World Database.
Iraq’s oil exports to India in August decreased 9.60 percent to 3.38 mt. Cumulatively, oil exports to India in the first five months of the present financial year increased 7.26 percent to 19 mt.
Iraq overtook Saudi Arabia to become the largest crude oil exporter to India last financial year which ended March 2018.
Overall, Iraq’s crude oil exports in the April-July 2018 period increased marginally to 62,285 mt.
India’s crude oil imports from Nigeria increased 8.42 percent to 1.09 mt in August as compared to one mt of crude oil imported in the corresponding month of the previous financial year. Cumulatively, crude oil imports from Nigeria in the April-August period decreased 20.34 percent to 5.81 mt.
Nigeria’s crude oil production and exports have been on a decline in the past few months owing to increased internal conflict in the nation.
Similarly, India’s crude oil imports from Venezuela fell over 91 percent in August this year to 0.18 mt. Cumulatively, India’s crude oil imports from Venezuela in the first five months of the current fiscal fell 11.36 percent to 7.63 mt.
Venezuela’s crude oil production is at its lowest point in 60 years on the back of lack of investments.
In an indication of increasing appetite for US crude, India’s crude oil imports from the US during the first five months of 2018-19 fiscal year rose nine times to 2.60 mt as compared to 0.28 mt of crude imported in the corresponding period last fiscal.
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