Freight risks and payment channels delay India’s return to Iranian oil imports

Indian refiners are evaluating the potential return of discounted Iranian crude oil following a temporary 60-day US sanctions waiver. The waiver, issued by the US Office of Foreign Assets Control (OFAC) following a recent US-Iran diplomatic understanding, has prompted international middlemen and trading houses to aggressively approach Indian state-owned and private processors with competitive pricing offers. Indian refiners completely halted purchases of Iranian oil in 2019 after the expiry of previous US sanctions waivers. Despite the highly attractive discounts being offered, domestic refiners are maintaining a highly cautious “wait-and-watch” stance. Industry analysts point out that a major rush for Iranian barrels is unlikely due to severe underlying operational bottlenecks. Specifically, a fresh flare-up of security incidents in the Strait of Hormuz has kept maritime risk premiums exceptionally high, leaving international shipowners highly hesitant to provide tankers, according to a report.

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