NEW DELHI: India has been slashing imports of crude oil from Iran as well as ramping up offers for oil and gas and defence purchases from the US, in a bid to get the superpower to grant an extension of the waiver for limited import of Iranian oil.
India’s crude purchases from Iran were slashed by 60 per cent YoY in February 2019. Iran, which was India’s third largest source of crude last year, has now slumped to the eighth spot as a result of cuts imposed on shipment.
In November last year, the US had given India and seven other nations a waiver to continue crude imports from Iran for six months, which is set to expire in May.
“India used to import about 9.4 per cent of its crude from Iran. We have been gradually replacing that with Saudi crude and even US shale oil. However, price differentials are huge, especially as crude prices are firming up… We will bring down our imports further, but for the time being, we need an extended waiver,” said top officials involved in the negotiations.
To sweeten the deal, India has already promised to buy $5 billion worth of oil and gas from the Americans every year and expedite some $18 billion worth of defence equipment.
Officials said Iranian oil remained the cheapest option for cash-strapped India, and its continued imports are essential to prevent the landed average price of crude from going up. Crude prices have gone up from about $54 a barrel in December-end to nearly $70/barrel in April first week. Besides, Iran offers virtually shipping charge-free crude deliveries.
Besides the lower cost, Indian refiners prefer Iranian crude as the West Asian nation gives credit over a longer period of time. India has already given permission to Iranian private lender Bank Pasargad to open a branch in Mumbai, which could be used to make payments.