India is poised to take a significant step towards reviving energy trade with Iran after a seven-year hiatus, following the resumption of crude oil purchases from the West Asian nation.
The transfer comes in the wake of the recent resumption of Iranian oil imports to Indian ports following short-term relief from the sanctions and the shifting dynamics of international oil supplies.
Sources in the industry told Financial Express that Indian oil refiners are looking at other cargoes from Iran as they look for reliable, cost-effective supplies in the backdrop of ongoing global energy market uncertainty. The revived trade coincides with West Asian crude supply disruptions encouraging refiners to diversify their crude sourcing.
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Why Iran is important for India
Prior to sanctions halting trade in 2019, Iran was one of the major suppliers of crude oil to India, accounting for a large portion of its oil imports. Indian crude buyers are looking at Iran because of its suitability for Indian refinery configurations and competitive pricing.
More imports from Iran can help India cope with the escalating import costs of geopolitical tensions and shipping difficulties in the Middle East, energy analysts note.
The recent volatility has already spurred refiners to look elsewhere for supplies such as Russia, Venezuela and now Iran, as put by energy analysts.
Energy Security Remains Priority
The government’s attention is being paid to keeping fuel supplies steady and preventing external shocks to the economy. India is one of the world’s biggest importers of oil and is still diversifying its oil imports while capitalizing on opportunities arising from shifting market dynamics.
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FAQs
Q1: Why did India stop importing Iranian oil in 2019?
Ans: India halted Iranian crude purchases after US sanctions on Iran’s oil sector came into force, making trade and payments difficult.
Q2: Why is India increasing imports from Iran now?
Ans: Eased sanctions and concerns over global supply disruptions have encouraged Indian refiners to consider larger purchases from Iran.
