Iran crude vital for sustaining balance in oil trade
Iranian crude in the global market is extremely important for sustaining a balance in oil trade, says Sanjiv Singh, chairman of Indian Oil Corporation Ltd.
India is one of the largest consumers of crude oil and since Iran has been one of the key suppliers, the country hopes the US will extend sanctions waiver, Singh said, Hindu Business Line reported.
On November 5, the US announced exempting eight countries, including India, from the sanctions for importing oil from Iran. This exemption is for six months and Washington will review the 180-day waiver it gave to India and seven others after April 2019.
Asked about what IndianOil’s strategy will be once the six-month period is over, Singh told BusinessLine “Let us see, we have six months.”
On the impact of sanctions on oil supply in the market, an Indian oil trader said on the condition of anonymity that even before the waiver was given, the market had already factored in a shortfall from Iran.
“So, the market was prepared. In fact, India has played its card very well — while it has not buckled under the US sanctions, it has continued to get reasonable supply from Iran.”
By continuing to buy from Iran, India has also been able to sustain a balance in the market, the trader said.
Meanwhile, senior officials in the government said India is likely to continue purchasing oil from Iran in 2019, although at lower levels than the previous year, and were hopeful that it will not lead to acrimony with the US. New Delhi is expecting a positive result when the US reviews the waiver, according to government officials.
India and Iran, however, have yet to resolve the way in which payments have to made for oil. New Delhi is keen that the rupee payment mechanism, used to partly pay for oil from Iran last time there were sanctions against the country, will be used this time as well. But alternative mechanisms, in which payments are made through currencies other than dollar, are also being examined.