Indian refiners said on Wednesday they were in no hurry to replace Iranian oil with alternatives, counting on the fact that many Western countries have so far declined to join the United States in pulling out of a nuclear deal with Tehran.
US President Donald Trump said on Tuesday he would reimpose economic curbs on Iran after withdrawing the United States from the 2015 agreement that lifted sanctions against Tehran in exchange for limits on its nuclear programme.
But the leaders of Britain, Germany and France, which were signatories to the deal along with China and Russia, said in a joint statement that Trump's decision was a cause for ‘regret and concern’ and were seeking to salvage the deal.
‘We are largely unaffected,’ said A.K. Sharma, finance chief at Indian Oil Corp (IOC). ‘This time the situation is different from the last time. We hope clarity on the real impact of sanctions will emerge in 10-15 days.’
IOC, India's biggest refiner, hopes to stick to its plans to buy as much as 180,000 barrels per day (bpd) of oil from Iran in 2018/19, more than double the volume in the last fiscal year that ended in March, Sharma said.
It would be difficult to replace Iranian oil given the ‘commercial terms’ offered by Tehran, he said.
India, which has long-standing ties with Iran but also has close political relations with the United States, is Iran's top oil client after China. Its state refiners had chalked out plans to almost double oil imports from Iran this fiscal year, drawn to the virtual free shipping on oil sales offered by Iran, Reuters reported last month.
The South Asian country remained a big buyer of Iranian oil even during previous Western sanctions, though it had to cut purchases to win some waivers as the trade was mostly done in US dollars. Since the 2015 agreement, however, Indian refiners have been settling oil dues with Iran in euros.
And given that three top European countries are still part of the deal, trade won't be affected much, at least in the short term, said R. Ramachandran, head of refineries at state-run Bharat Petroleum Corp.
In any case, oil sanctions will kick in in about six months, by which time most Indian refiners ‘may have consumed most of their Iranian volumes’, Ramachandran said.
The US Treasury Department has indicated that sanctions won't be reimposed immediately, and will take up to 180 days to allow Iranian oil customers and other companies involved in doing business with Tehran to make plans.
M.K. Surana, chairman of Hindustan Petroleum, said refiners may use that time to step up purchases from Iran.
The Indian oil ministry has not commented on the US pullout, but the foreign ministry on Wednesday called for diplomacy to resolve the dispute over the nuclear deal with Iran.
Separately, South Korea said on Wednesday it would seek US exemptions to buy Iranian oil, a path many big oil consumers are likely to follow in the wake of new US sanctions on Tehran, which will tighten world oil markets and push up prices.
