The National Iranian Oil Company (NIOC) has started reaching out to international oil companies, including Indian refiners, and trading houses to resume commercial ties in a bid to restart its global oil exports, according to trade sources.This comes against the backdrop of the US-Iran memorandum of understanding (MoU) being in place, with the first round of talks under the terms of the initial pact indicating progress between Washington and Tehran.The MoU, which was inked last week, mentioned that the US will initially issue sanctions waivers for Iranian crude and petroleum products, until it terminates its sanctions on Iranian oil and its trade. On Monday evening (India time) the US Department of the Treasury issued a temporary 60-day waiver, allowing production, delivery, and sale of Iranian oil, petroleum products, and petrochemicals through August 21. The US has also committed to removing its naval blockade of Iranian ports. Both measures are being counted upon by the NIOC to move its oil — which has for years been predominantly exported to China — to the wider international market, trade sources said.Indian refiners, too, have recently received communication from the NIOC, it is learnt. A senior refinery executive said that refiners’ trading teams are in touch with the Iranian side and deliberations are on regarding the techno-commercial feasibility of lifting Iranian oil under the arrangement listed in the US-Iran MoU. Iran used to be a major source of crude oil for India, but New Delhi stopped buying Iranian oil in 2019 after the first Donald Trump administration walked away from the Iran nuclear deal and reimposed sanctions on Tehran.After a gap of nearly seven years, Indian refiners again bought Iranian crude in April after the US issued a month-long sanctions waiver in a bid to bring more oil to the global market amid the West Asia war and the effective closure of the Strait of Hormuz. But once that waiver lapsed, imports from Tehran stopped again. India imported about 530,000 tonnes of Iranian oil in April, as per data from the Directorate General of Commercial Intelligence and Statistics (DGCIS). Indian refiners steer clear of oil and gas under US sanctions to avoid the risk of attracting secondary sanctions from Washington.“We have been holding regular discussions on the techno-commercial feasibility of buying Iranian oil. Our teams are working to ensure that they are prepared to buy Iran’s crude when it is available, as per our requirement and its viability in terms of payment mechanisms and other logistical considerations,” said a senior refinery executive, who didn’t wish to be identified. The executive said that the NIOC recently reached out to his company regarding resumption of oil trade.Broadly, the techno-commercial feasibility of buying oil from a certain seller is a comprehensive evaluation to ascertain if the crude oil under consideration is technically compatible with the refineries, and is commercially and logistically practical to purchase.Story continues below this adKey considerations for Indian refiners to tap into Iranian barrels would primarily include their view of the scope and durability of sanctions relief, pricing structure, and the availability of payment, insurance, and logistics mechanisms, according to industry analysts. Apart from Iran’s petroleum sector, its financial sector is also under US sanctions, creating payment-related and other logistical constraints in its oil trade. Refinery executives said that calls on Iranian oil imports will be taken once there is clarity on all these aspects.While the US waiver pertains specifically to Iran’s oil, petroleum product, and petrochemical exports, and not to the financial sector sanctions on Tehran, the waiver notification does mention that payments for such purchases will be allowed in dollar-denominated funds. This could help ease some, if not all, payment-related pain points pertaining to purchase of Iranian energy.“The key question is whether banking restrictions are eased alongside export waivers. The March waiver generated limited participation from non-Chinese buyers, with only three cargoes purchased by Indian refiners. Most other buyers remained on the sidelines due to payment restrictions and reputational concerns associated with trading Iranian crude during an active conflict. Should financial sanctions also be relaxed, the pool of potential buyers would expand materially,” Homayoun Falakshahi, head of crude oil analysis at commodity market analytics firm Kpler said in a recent note.India had 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. 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.Story continues below this adBack in 2009-10, India imported 22.1 million tonnes (mt) of crude oil from Iran and it accounted for 14.4% of India’s overall oil import of 153.6 mt in that year, as per DGCIS data. But as international sanctions on Iran intensified, hitting payment channels and creating other logistical hurdles, the volumes declined subsequently — to 16.1 mt in 2010-11, 14.9 mt in 2011-12, 13.2 mt in 2012-13, 11.3 mt in 2013-14, and 11.2 mt in 2014-15.During 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.With the sanctions effectively withdrawn, Indian refiners started ramping up oil imports from Iran. India imported 13.6 mt of Iranian oil in 2015-16, and the volumes shot up to 27.1 mt in 2016-17, making Tehran the third-largest source of New Delhi’s oil imports behind Saudi Arabia and Iraq. Iran also did its bit to boost oil trade with India 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 mt.In 2017-18, the Iranian oil volumes declined to 22.6 mt due to a few reasons — tensions between New Delhi and Tehran over the development rights of a gas field in Iran, India’s move to step up diversification of its sources of oil, and the election of Donald Trump as US president. The last factor emerged as the defining one over the next two years, as Trump walked away from the Iran nuclear deal, and re-imposed sanctions on Tehran. A waiver was given by Washington to major buyers of Iranian oil, which expired in 2019. In 2017-18, India’s Iranian oil imports were at 23.9 mt, and crashed to just 2 mt in 2019-20 as no Iranian oil came to India after May 2019.