Indian Refiners Remain Wary of Iranian Oil Despite U.S. Waivers

India, the world’s third-largest importer of crude oil, is showing little enthusiasm for resuming purchases of Iranian crude, even after the United States issued a temporary waiver easing sanctions.

According to sources familiar with the matter, Indian state refiners are hesitating due to ongoing concerns about shipping logistics, insurance coverage, and payment mechanisms, Bloomberg reported on Tuesday.

On Friday, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a general license permitting the import of Iranian crude oil loaded onto vessels as of March 20, valid through April 19. This marks a temporary relaxation of sanctions that had prompted India to halt all Iranian oil imports since 2019.

However, with over half of India’s crude now sourced from other Middle Eastern producers, refiners remain cautious about reintroducing Iranian oil into their supply chains. Despite renewed access, Indian refiners are wary.

The potential risks associated with payments processing, currency complications, and logistical challenges currently outweigh the appeal of diversifying supply. Officials fear that engaging in trade with Iran could lead to complications if the waiver is abruptly rescinded after its short window of validity.

Meanwhile, India has ramped up purchases of Russian crude, which has also been temporarily “unsanctioned” by the U.S. as part of efforts to stabilize global oil prices and curb domestic gasoline costs

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Indian buyers have managed to outcompete Chinese counterparts for Russian cargoes, with some shipments diverting mid-journey from Chinese destinations to Indian ports. This shift is fueled by the combination of eased restrictions on Russian imports and ongoing disruptions in Middle Eastern supply.

India’s caution toward Iranian crude mirrors similar apprehensions from Chinese state refiners.

Sinopec, the largest refiner in Asia by capacity, has expressed reluctance to engage in Iranian oil trade for now. Zhao Dong, the company’s president, stated on Monday that Sinopec is considering the risks involved and is unlikely to proceed with purchases.

Experts in sanctions and international energy trade believe the limited waiver on Iranian crude—confined to shipments already at sea—will likely fail to attract a broad range of new buyers.

Many firms remain concerned about the broader network of Iran-related sanctions still in effect and uncertainty over whether the waiver will extend beyond April 19.

While both countries grapple with these challenges, India’s hesitancy underscores the ripple effects of geopolitical complexities on global energy markets, pushing its refiners to find alternatives wherever possible.

Culled from Oilprice.com