Two Indian oil companies have placed orders to import Iranian crude next month, Oil Minister Dharmendra Pradhan said Monday, defying a call from President Donald Trump 's administration for countries to completely cut-off the Islamic republic. Reuters had reported on Friday that India would buy 9 million barrels of Iranian oil next month.
The sanctions could cut off 1 million barrels a day of Iran's crude oil.
She said the sanctions that would come into force on 4 November were created to bring Tehran to book and not to penalise India, which meets 83% of its crude oil requirements from outside.
"India is continuing with its relationship with both its key energy partners Iran and the USA", a second source said.
After going ahead with the S-400 missile deal with Russian Federation despite the USA threat of sanctions, reports now suggest that India may continue buying oil from Iran even after the sectoral sanction imposed by the United States begin on November 4.
On the fall of crude price, oil watchers likened the cause on expectations that some Iranian oil exports will keep flowing despite US sanctions, easing a strain on supplies.
"Chatter that Saudi Arabia has replaced all of Iran's lost oil" is weighing on prices, said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
In the previous round of sanctions from 2012 to 2015, India continued to buy Iranian crude although it had to cut purchases significantly to protect its wider exposure to the US financial system.
The country's largest privately owned crude terminal, the Louisiana Offshore Oil Port LLC, said late on Tuesday it had halted operations at its marine terminal. However, this time it is likely to skirt Washington's embargo on dollar payments by using rupees, while payments will probably be routed through Indian banks to avoid any USA financial intervention. Since the start of September, prices had spiked by over 10 per cent reaching a four-year high despite the fact that at the Algiers meeting last month OPEC had declared that the market was comfortably supplied.
"We will be guided by our national interest", he said.
Benchmark Brent crude was up 65 cents at $84.56 a barrel by 0850 GMT, having fallen as low as $82.66 on Monday.
Iran's economy is now forecast to contract this year and especially in 2019, by 3.6 percent, "on account of reduced oil production, before returning to modest positive growth in 2020-23", according to the International Monetary Fund. To this, taxes at the central and state levels are added, besides dealers' commission, to arrive at the retail price. Also, subsidised domestic cooking gas prices have been increased by Rs 2.89 per 14.2 kg cylinder to Rs 502.40, an all-time high.
The Minister also categorically stated that the government's directive to oil companies to absorb a Rs. 1 per litre hit to the price of petrol and diesel was not a reversal of the deregulation of oil prices. "The basic point is that they are all government companies", Pradhan said, according to The Hindu.