(Bloomberg) -- India’s state-run oil refiners are ready to snap up Iranian crude the moment U.S. sanctions are eased, according to a government official.
Refiners have started making preparations in advance of the possible removal of penalties so they can swiftly enter into contracts for Iranian supply, said a senior oil ministry representative, asking not to be named because they’re not authorized to speak to the media. This includes drafting commercial terms and putting in place mechanisms to quickly assess crude quality, the official said.
India has been vocal in its support for Iranian crude purchases recently as it laments the price of supplies from Saudi Arabia. The world’s third-largest importer has also signaled its desire to diversify its sources of oil, hoping the new U.S. administration will take a softer line on sanctioned producers. Its criticism comes as the consumer struggles with lower demand due to a Covid-19 resurgence.
Indian refiners have been buying new grades from areas outside of the Middle East including Guyana and Norway, while also taking more U.S. crude in an effort to reduce reliance on OPEC producers.
Iranian exports tumbled after former U.S. President Donald Trump tightened sanctions in 2018 and ended waivers for some countries in 2019, including India. Iran and world powers this week began their most serious attempt yet to resurrect a nuclear deal. While some progress has been made, the path to an easing of penalties and sharply higher oil exports remains uncertain.
India -- once Iran’s second-biggest customer -- imports more than 85% of its total oil needs. Getting access to Iranian crude would bring a number of benefits, including cheaper barrels and a longer credit cycle, while the shorter voyage means savings on freight costs. China, meanwhile, has recently boosted purchases from the sanctioned nation to about 1 million barrels a day.
Spokespeople at the biggest state-run refiners -- Indian Oil Corp, Hindustan Petroleum Corp. and Bharat Petroleum Corp. -- declined to comment.
© 2021 Bloomberg L.P.
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