Iran has started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have backed out of covering oil cargoes from Iran in the face of the returning U.S. sanctions on Tehran, Reuters reports, quoting industry sources.
Iran is looking to continue to sell its oil to India—its second-largest single oil customer after China—even as some Indian refiners are said to be thinking of reducing oil imports from Iran for fear of running afoul with the U.S. sanctions and having their access cut off to the U.S. financial system.
United India Insurance has already stopped providing insurance cover for crude oil cargoes out of Iran, a source at the company told Reuters.
According to Reuters’ industry sources, Iran has recently insured crude oil cargoes en route to India on tankers operated by the National Iranian Tanker Company (NITC), as western insurers, as well as Indian ones, have stopped providing cargo insurance for Iran’s oil sales.
The two top Indian refiners, Indian Oil Corp (IOC) and Bharat Petroleum Corp, have started to purchase Iranian oil in Iran-owned tankers and insured by Iran, the industry sources told Reuters.
Earlier this week, Hindustan Petroleum was said to have cancelled a crude oil shipment from Iran after its insurer refused to provide coverage for the cargo on concern about U.S. sanctions.
Hindustan Petroleum, India’s third-largest state-owned refiner, ordered the 1-million-barrel shipment earlier this month, and after the refusal of its insurance company to cover a cargo loaded on an Iranian tanker, it tried to sell it on but could not find buyers, the sources said.
The Indian refiner imports about 20,000 bpd of Iranian crude, which is a relatively small part of its daily consumption, which amounts to 316,000 bpd, but other Indian refiners could run into the same problem, OilPrice reported.