Head of the Iran-India Commercial Council outlined possible reasons behind India’s declining oil imports from Iran in January, despite their growing interest in Iranian oil.
About the drop in Iran’s oil exports to India in January compared with the last month and also with last year’s corresponding period, Ebrahim Jamili also told ISNA that this may be a result of an increase in India’s oil supplies or banking problems.
India's oil imports from Iran fell more than a quarter in January from the previous month, although incoming shipments are expected to pick up in February as post-sanctions crude starts arriving.
In January, India received 170,700 barrels per day of oil loaded from Iran while sanctions were still in place, a decline of 27% from December and down 38% from a year ago, the preliminary tank arrival data obtained by Reuters showed.
Two of the refiners, Essar Oil and Mangalore Refinery and Petrochemicals Ltd, have already booked three cargoes for arrival in February that would bring India's Iran purchases for the first-half of the month to nearly 300,000 barrels per day.
Jamili believes the main issue in this regard is payment methods, as payments are made differently before and after the sanctions removal against Iran, hence new accommodated methods must be adopted for money transfer.
“On the whole, Indian refiners have become more interested in Iranian oil … India was also one of the countries that put less restrictions on oil imports from Iran when the sanctions were in place,” Jamili said. Indian refiners say they are keen to import more from Iran at the right price, as the country's demand for fuel soars on the back of 10% annual growth in car sales, a rate that is now faster than China's.
"It makes sense to buy oil from nearby options (like Iran)," said H. Kumar, managing director of an Indian oil firm, Mangalore Refinery and Petrochemicals, but added "intake will depend on prices".
According to Jamili, there is no obstruction to the rise in Iran’s oil export to the Asian country and the drop will “definitely” be compensated, adding that this is in line with the Oil Ministry’s top priority, which is to regain its pre-sanctions market share.
Referring to Iran’s need to look for new markets, he stressed, “With the termination of oil embargos, the number of customers for Iranian oil will increase, as Iran’s crude is of high quality compared with other producers’.”
Jamili expressed optimism that India will increase oil imports from Iran in the post-sanctions period.
With Iran poised to resume business ties with the world under a historic nuclear deal, Tehran is set to target India, Asia's fastest-growing major oil market and old partners in Europe with hundreds of thousands of barrels of oil.
Iran hopes to raise its exports to India by 200,000 bpd, up from the 260,000 bpd shipped under sanctions' restrictions.
Tehran plans to lift exports by 500,000 barrels per day post-sanctions and gradually raise shipments by the same amount.
