As the war in West Asia crimps the global supply of oil and sends its prices soaring, the US is considering removing sanctions on Iranian crude that is already at sea.If the US indeed moves in this direction, India could very well be among the major beneficiaries. Iran was once a major oil supplier for India. But New Delhi halted these imports after the first Donald Trump administration imposed heavy sanctions on Tehran and removed the sanction waivers enjoyed by major Iranian crude buyers.Seven years later, the US may now be forced to “unsanction” — even if partly and temporarily — Iranian oil sales to bring down oil prices. Such a move looks all the more likely considering that the US had also announced a similar month-long universal waiver on sanctioned Russian crude already in tankers at sea.In response to the US and Israel’s offensive that began on February 28, Iran effectively choked vessel movements through the Strait of Hormuz. The passage accounts for one-fifth of global oil and liquefied natural gas (LNG) flows. Its effective closure, along with attacks on energy infrastructure in the region by all sides, have caused a surge in global oil prices. While some oil volumes are being evacuated from West Asia through a couple of other alternative routes that bypass the Strait, a bulk of the supply through the narrow waterway has effectively gone offline.“We unsanctioned Russian oil. We knew that there were about 130 million barrels on the water and we created supply that is beyond the straits of Hormuz… In the coming days, we may unsanction the Iranian oil that’s on the water. It’s about 140 million barrels. So, depending on how you count it, that’s 10 days to two weeks of supply that the Iranians had been pushing out that would have all gone to China,” US Treasury Secretary Scott Bessent said Thursday on Fox Business Network. “In essence we will be using the Iranian barrels against the Iranians to keep the price down… for the next 10 or 14 days as we continue this campaign.”Can India import Iranian oil?It remains to be seen whether the US goes ahead and suspends the sanctions on Iranian oil already on water. Asked whether India would be keen on importing Iranian crude if Washington indeed announced a waiver, Petroleum Ministry Joint Secretary Sujata Sharma said Friday that it was a hypothetical question at this stage. Nonetheless, industry analysts say that such a move could see Indian refiners capitalize on the opportunity, just like they did by ramping up imports of Russian crude in recent weeks.“Recent market chatter around a potential easing or restructuring of US sanctions on Iranian crude… has reintroduced a key swing factor in global crude flows. India could emerge as a key demand centre to watch, alongside Chinese buyers and other Asian countries. Historically, India was a major buyer of Iranian crude, importing significant volumes of Iranian Light and Heavy grades due to strong refinery compatibility and favourable commercial terms. Following sanctions tightening in 2018, imports ceased from May 2019, with volumes replaced by Middle Eastern, US and other grades,” said Sumit Ritolia, lead research analyst, refining & modeling, at Kpler, a commodity market analytics firm.Story continues below this adCurrently, Iranian crude availability is high, with an estimated 170 million barrels on the water, including floating storage and cargoes in transit, as per Kpler data.While part of these volumes is committed, a portion remains unsold, representing potential incremental supply if sanctions ease or enforcement weakens, Ritolia said. The analyst said that Indian refiners retain the ability to re-integrate Iranian barrels with minimal operational adjustments at their refineries, given their prior experience in processing Iranian oil and the presence of established trading setups.Key considerations for Indian refiners to tap into Iranian barrels, if made available, would primarily include the scope and durability of sanctions relief, pricing structure, and the availability of payment, insurance, and logistics mechanisms. “If these conditions align, a ramp-up in Indian imports of Iranian crude could be significant, similar to the rapid increase observed in Russian crude intake following the easing of Western sanctions,” Ritolia said.According to tanker data from Kpler, India’s Russian oil imports so far in March have surged to 1.8 million barrels per day (bpd), from 1 million bpd in February. The pre-war expectation for India’s Russian oil imports in March was around 0.8-0.9 million bpd. Now they could reach 2-2.2 million bpd — the peak levels of 2025. This ramp-up was necessitated by the Strait of Hormuz’s effective closure. Washington’s waiver on purchases of sanctioned Russian crude on water also supported this shift.Story continues below this adAround 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. The longer-term average is around 40%. India depends on imports to meet over 88% of its requirement of crude oil. At the global level, around 20 million barrels a day of crude oil usually passes through the Strait of Hormuz.India-Iran oil tradeIndia has not imported any oil from Iran since May 2019, after the expiration of the sanctions waiver that the US had provided to major buyers of Iranian oil. Not complying with American sanctions would have made Indian oil companies vulnerable to secondary sanctions from Washington. Prior to that, India had been a regular buyer of Iranian oil, even during previous sanctions periods of the pre-Trump era, when import volumes of Iranian crude declined, but were still not insignificant.Back in 2009-10, India imported 22.1 million tonnes of crude oil from Iran and it accounted for 14.4% of India’s overall oil import of 153.6 million tonnes in that year, according to data from the Ministry of Commerce and Industry. But as international sanctions on Iran intensified, hitting payment channels and creating other logistical hurdles, the volumes declined — to 16.1 million tonnes in 2010-11, 14.9 million tonnes in 2011-12, 13.2 million tonnes in 2012-13, 11.3 million tonnes in 2013-14 and 11.2 million tonnes in 2014-15.During the peak sanctions period — 2012 to 2015 — India was buying Iranian oil through a mutually-agreed payment mechanism. Under that system, Indian refiners paid 45% of the oil payments in rupees into an account held by Iranian banks in India, and Iran used that money to buy Indian goods. The remainder of the payments were deferred until sanctions were lifted. The sanctions were formally lifted as part of the Iran nuclear deal, after which pending oil payments by Indian refiners were cleared. Major Indian buyers of Iranian oil in this period were Essar Oil (now Nayara Energy) and Mangalore Refinery and Petrochemicals (MRPL).Story continues below this adWith the sanctions effectively withdrawn, Indian refiners started ramping up oil imports from Iran. India imported 13.6 million tonnes of Iranian oil in 2015-16, and the volumes shot up to 27.1 million tonnes in 2016-17, making Tehran the third-largest source of India’s oil imports behind Saudi Arabia and Iraq. Iran also did its bit to boost India’s purchases of its oil by offering discounted shipping and extended credit periods to Indian refiners. In 2016-17, Iranian oil made up 12.6% of India’s total crude oil imports of almost 215 million tonnes.In 2017-18, the Iranian oil volumes declined to 22.6 million tonnes due to a few reasons — tensions between New Delhi and Tehran over the development rights of a gas field in Iran, India’s diversification of its supply and the first Donald Trump presidency. The last factor was the defining one over the next two years as Trump walked away from the Iran nuclear deal and re-imposed sanctions. A waiver was given by the US to major buyers of Iranian oil, which expired in 2019. In 2017-18, India’s Iranian oil imports were at 23.9 million tonnes, and crashed to just 2 million tonnes in 2019-20. No Iranian oil came to India after May 2019.