Middlemen are actively offering discounted Iranian oil to Indian refiners following the 60-day US sanctions waiver announced on Monday after the first talks under a nascent peace deal. According to Business Standard, several middlemen have approached Indian refiners with offers, with approaches coming directly from National Iranian Oil Co (NIOC) and through intermediaries who claim to have been allocated oil by the Iranian state producer. One refining source stated that while several traders are contacting them for Iranian oil sales, their priority remains to give preference to NIOC. NIOC is offering Iranian crude at $3 to $4 per barrel cheaper than similar regional grades on a landed basis, as reported by Business Standard. The traders approaching refiners are mainly from small and mid-sized trading companies based in Singapore and Dubai, though sources declined to name them due to confidentiality. As per The Hindu BusinessLine, India is keen to take advantage of the 60-day US sanctions waiver by resuming imports of discounted crude from Tehran, with the temporary sanctions relief reopening the possibility of sourcing crude from Iran, which had traditionally been one of India's largest oil suppliers.
India's state-run refiners have secured sufficient crude oil supplies for two months and are not rushing to purchase from the Middle East even if the Strait of Hormuz reopens, according to The Economic Times. Suppliers have requested refiners to resume contractual volumes, but Indian refiners have not yet committed to any new purchases. This position reflects the broader market uncertainty following recent geopolitical developments, with refiners maintaining a cautious approach to Middle Eastern crude sourcing despite potential supply opportunities. Most of India's oil purchases for the coming months have already been booked, with state-run and private refiners currently securing cargoes for late August and September, as reported by The Times of India. However, as reported by The Hindu BusinessLine, Indian refiners have limited scope to absorb Iranian crude in the near term because most have already secured supplies through August and Middle Eastern term suppliers are pressing buyers to honour annual contractual commitments.
India's imports from the Middle East fell significantly in the second quarter, prompting refiners to consider alternative suppliers, as reported by The Economic Times. Indian Oil Corporation, India's top refiner, has issued tenders for vessels that will transport liquefied petroleum gas and oil from ports within the Strait of Hormuz. The company seeks to charter a VLGC (Very Large Gas Carrier), a Suezmax tanker, and a VLCC (Very Large Crude Carrier). However, Indian Oil Corporation has failed to secure any bids for chartering vessels to transport crude oil and LPG from the Strait of Hormuz, as ship owners remain hesitant due to the current geopolitical climate and prefer to await clearer terms before entering the region. Russian and Middle Eastern grades continue to dominate procurement, while Venezuelan crude has also been gaining market share, as reported by The Times of India.
Potential supplies of crude and liquefied petroleum gas (LPG) to India were discussed during Iranian Petroleum Minister Mohsen Paknejad's visit to New Delhi this week, according to The Hindu BusinessLine. India had already imported Iranian LPG through traders, and those flows could rise under the sanctions waiver, though commercial negotiations could take some time because payment mechanisms and banking channels remain unclear. India received two cargoes of Iranian oil in April after Washington granted a 30-day sanctions waiver, with payments settled in Chinese yuan. Iran was India's second-largest oil supplier in the 2010/11 financial year before US sanctions pushed New Delhi to reduce purchases and eventually halt crude imports from Tehran in May 2019. Before sanctions were tightened, Iran was among India's top three crude suppliers, with its proximity to India's west coast translating into significantly lower shipping costs compared with supplies from many other parts of the world while Tehran often offered favourable commercial terms to Indian buyers.
While there are currently no restrictions on the currencies that may be used for payments, refiners are keen to understand which banks would be authorised to handle transactions and the payment mechanisms they would prefer before proceeding with purchases. As per The Hindu BusinessLine, companies are awaiting greater clarity from OFAC on the banking channels permitted for settlement under the general licence. The banking framework is the key operational issue now, with sources stating that once there is clarity on the banks that can participate and the payment arrangements, refiners can take a commercial call. Payment mechanisms remain the biggest operational hurdle, alongside insurance, shipping and logistics arrangements, as reported by The Hindu BusinessLine. Even if sanctions relief allows cargoes to move, refiners need confidence that payments can be settled without regulatory complications. The analyst also pointed to a similar sanctions waiver issued in March, which resulted in little participation from buyers outside China because payment and compliance challenges persisted.
Indian refiners are unlikely to significantly increase purchases of Iranian crude despite the temporary sanctions waiver, as uncertainty over the duration of the waiver, payment constraints, and existing supply commitments limit the scope for new buying. According to The Hindu BusinessLine, the United States has provided a 60-day sanctions waiver that temporarily allows Iranian crude exports, but the short timeframe is unlikely to trigger a broad return of buyers beyond China. As reported by market analyst Sumit Ritolia from Kpler, Indian refiners have already secured much of their crude requirements for the coming months, with procurement plans typically finalised two to three months in advance. "Opportunistic purchases are possible if discounts become highly attractive, but the overall scope appears limited," Ritolia told PTI, noting that buyers are unlikely to make major commitments when the future of sanctions remains uncertain. Several intermediaries and trading firms have already approached Indian refiners with offers of Iranian crude following the US decision, reflecting expectations that demand from former buyers could revive during the 60-day window.
