Amid the ongoing Middle East crisis that has disrupted the global oil supply chain, Indian refiners have made their first purchase in seven years since 2019, according to Reuters.India had not received any cargo from Tehran since the US pressured it to halt crude imports, according to the petroleum ministry. This marks the latest development in a significant shift in sourcing strategy.Indian refiners have purchased Iranian oil amid the escalating conflict in West Asia that has disrupted supplies through the Strait of Hormuz. India, the world’s third-largest oil importer and consumer had not received a single cargo from Iran since May 2019 after US sanctions forced a halt to trade.However, recent disruptions linked to the ongoing US-Israel conflict have tightened global supplies, impacting India’s energy security.In a statement, the ministry said, “Amid Middle East supply disruptions, Indian refiners have secured their crude oil requirements, including from Iran; and there is no payment hurdle for Iranian crude imports.”The ministry further assured that India’s crude oil needs for the coming months remain fully secured.
No payment issues, supply fully secured: Government
Dismissing reports that an Iranian oil shipment meant for India was diverted to China due to payment-related hurdles, the government termed such claims “factually incorrect.”Clarifying the situation, the ministry said, “The news reports and social media posts of an Iranian crude cargo being diverted from Vadinar, India to China due to ‘payment issues’ are factually incorrect.”The ministry added that Indian companies enjoy full flexibility in sourcing crude.“India imports crude oil from 40-plus countries, with companies having full flexibility to source oil from different sources and geographies based on commercial considerations.”
Why India stopped buying Iranian oil?
Before sanctions were tightened in 2018, India was among the largest buyers of Iranian crude, importing both Iran Light and Iran Heavy grades due to refinery compatibility and favourable pricing terms.At its peak, Iranian crude accounted for around 11.5 per cent of India’s total imports. In 2018, India imported approximately 518,000 barrels per day of Iranian oil.However, imports declined to about 268,000 bpd between January and May 2019 during a sanctions waiver period, before dropping to zero after the United States ended exemptions and reimposed restrictions.Since then, India has diversified its sourcing basket, shifting to suppliers in the Middle East, the United States and more recently, Russia.The waiver is expected to remain in place until April 19, with an estimated 95 million barrels of Iranian oil currently stored on vessels at sea.Apart from crude, India has also received Iranian liquefied petroleum gas (LPG).The ministry confirmed that a vessel carrying around 44,000 metric tonnes of Iranian LPG berthed at the western port of Mangalore on April 2 and is currently discharging fuel.
What a US sanctions waiver could mean for India?
India has not purchased Iranian crude since mid-2019 after the US withdrew sanction waivers. However, the current crisis has brought the possibility of limited relief back into focus.Nearly 35–40 per cent of India’s crude oil imports pass through the Strait of Hormuz, a route now disrupted due to the ongoing conflict. This has increased urgency for India to secure alternative and reliable supplies.To offset potential shortages, India has ramped up purchases of Russian crude. According to Kpler, the country bought nearly 30 million barrels of Russian oil in a single week after the conflict escalated.If the US were to allow limited “unsanctioned” trade of Iranian oil at sea, it could provide India with another crucial supply source.Energy experts suggest India could quickly step up imports. Sumit Ritolia, Lead Research Analyst at Kpler, highlighted that historically India has been a major buyer due to strong refinery compatibility and favourable commercial terms.He said speculation around easing sanctions has reintroduced Iran as a key variable in global oil flows, adding that India could emerge as a major demand centre alongside China and other Asian buyers.“India could emerge as a key demand centre to watch, alongside Chinese buyers (state-owned enterprises and large independents) and other Asian countries,” he said.
