This is the first official confirmation from the government that India is buying Iranian crude, following the sanctions waiver for Iranian oil on water announced by the US last month. (File Photo)Indian refiners are buying crude from Iran as part of their efforts to secure oil supplies amid the disruption in energy flows due to the West Asia war and there are no payment-related hurdles in paying for Iranian oil, the government said Saturday. It also said that the recent diversion to China of an India-bound oil tanker carrying Iranian crude was not due to “payment issues”.This is the first official confirmation from the government that India is buying Iranian crude, following the sanctions waiver for Iranian oil on water announced by the US last month. The government also confirmed that a tanker carrying 44,000 tonnes of Iranian liquefied petroleum gas (LPG) berthed at Mangalore on April 2 and is currently discharging the cargo. It also reiterated that India’s “crude oil requirements remain fully secured for the coming months”.Eswatini-flagged tanker Ping Shun with around 600,000 barrels of Iranian oil, which was approaching the Vadinar port in Gujarat, late Thursday changed its declared destination to Dongying in China’s Shandong province. Trade sources had indicated that payment-related issues could be the reason behind the diversion. For nearly seven years now, India has not imported Iranian oil, and this was expected to be the first delivery.“India imports crude oil from 40+ countries, with companies having full flexibility to source oil from different sources & geographies based on commercial considerations. Amid Middle East supply disruptions, Indian refiners have secured their crude oil requirements, including from Iran; and there is no payment hurdle for Iranian crude imports, contrary to the rumours being circulated,” the Petroleum Ministry said in a post on social media platform X.On Ping Shun’s diversion, the ministry said that in international oil trade, bills of lading often carry indicative discharge port destinations and on-sea cargoes can change destinations “mid-voyage based on trade optimisation and operational flexibility”. According to shipping sector insiders, this indicates that the diversion could possibly have happened due to the cargo fetching a higher price elsewhere, China in this case. With global oil supplies hit due to the disruption in energy flows via the critical maritime chokepoint of the strait of Hormuz, countries are scrambling to secure energy supplies, and such diversions are not uncommon.The tanker Ping Shun had taken a path that was headed to Vadinar, and as of Thursday afternoon, it was indicating arrival at the Gujarat port between late Thursday and early Friday. Later, it took a sharp turn to the south from its earlier course, and changed its declared destination to Dongying. Industry watchers had earlier said that the diversion appeared to be due to the sellers tightening terms—moving away from the earlier 30-60-day credit window toward upfront or near-term settlement.Amid the raging West Asia war, the US on March 21 suspended for a month the sanctions on Iranian crude already loaded on tankers in a bid to allow as many barrels of oil as possible to flow into the international market to improve the global oil supply situation and curb spiraling crude oil prices. The waiver from Washington was similar to the one issued for Russian oil earlier in March. India hasn’t imported Iranian crude since May 2019 due to reimposition of US sanctions on Tehran by the first Trump administration.Story continues below this adAccording to the general licence issued by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury on March 21, transactions related to the sale, delivery, or offloading of crude oil and petroleum products of Iranian origin – loaded on any vessel, including tankers sanctioned by the US, as of 12.01 eastern daylight time (9.31 am India time) on March 20 – are authorised until April 19. Data indicates that Iranian crude was loaded on Ping Shun around March 4 at Iran’s main oil facility of Kharg Island, which means that the crude on this tanker was not under US sanctions.Vessel movements through the Strait of Hormuz have effectively been halted due to the conflict that began on February 28; Iranian oil shipments have continued unabated though. The Strait accounted for one-fifth of global oil and liquefied natural gas (LNG) flows. Around 2.5–2.7 million bpd of India’s crude imports—around half of the overall oil imports—have transited the Strait in recent months, while the longer-term average is around 40%. India depends on imports to meet over 88% of its requirement of crude oil.Sukalp Sharma is a Deputy Associate Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 16 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More © The Indian Express Pvt LtdTags:CrudeIran-Israel War