New Delhi — India is in talks with the US to extend a waiver permitting it to continue importing Iranian oil after March, an Indian oil ministry official said Thursday.
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The US granted eight key Iran oil buyers a 180-day exemption from sanctions as they came into force in early November, enabling China, India, Japan, South Korea, Turkey, Taiwan, Italy and Greece to purchase some Iranian crude until March.
Indian imports of Iranian crude have averaged around 300,000 b/d since December according to estimates from S&P Global Platts.
Iranian crude exports to India had been robust before the current sanctions were implemented. More than 600,000 b/d of Iranian crude was shipped to India in September, while inflows were nearly 500,000 b/d in October, according to analysts and data from cFlow, a Platts trade tracking tool.
Most analysts expect China, India and Turkey to be again granted waivers from April.
"The real challenge, according to sources, will be India, which has been granted waivers of 300,00 b/d and is set to take advantage of its full quota as it ramps up imports over the next month," analysts with Medley Global Advisers said in a recent note.
"The Indian government continues to put in place policies that would facilitate refinery purchases of Iranian crude, including exempting rupee payments to the National Iranian Oil Co (NIOC) from withholding taxes," it added.
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The official also said Indian oil refiners have started paying in rupees for crude imports from Iran.
The two governments have been working on a mechanism to allow a branch of an Iranian bank to carry out oil trade using Indian rupees.
Indian Prime Minister Narendra Modi's government has given permission to Bank Pasargad, to open a branch in Mumbai, officials said.
After sanctions were lifted in 2016, Indian state-owned refiners stepped up Iranian crude imports as Tehran offered steep discounts on freight. In addition, Iran allows a 60-day credit on oil purchases, making it lucrative for Indian refiners.
Indian crude imports from Iran continued at 200,000-250,000 b/d during the previous round of sanctions on Iran.
-- Rantajyoti with Eklavya Gupte, newsdesk@spglobal.com
-- Edited by Jonathan Dart, newsdesk@spglobal.com