“We are hopeful that we will have some option left to continue our imports from Iran. Zero imports from the West Asian major is neither good for India and nor for the world as it may lead to a spike in prices,” said Sanjiv Singh, chairman, IOC.
HPCL Chairman M K Surana, too, said on Thursday that his company will resume imports if India gets a waiver.
Singh added Indian companies have various payment options including partial rupee or euro payment and will take a call depending on the situation.
The countries that got waiver include major Iran crude oil importers like India, South Korea and Japan among others. Two companies — IOC and Mangalore Refineries and Petrochemicals — had placed orders of around 1.25 million tonne (mt) for November. India was supposed to import around 21 mt crude oil from Iran during the current financial year.
Payment for Iran crude would continue to be a challenge. India was considering paying through the Iranian private lender Bank Pasargad, that has a branch in Mumbai. Otherwise, it can opt for partial rupee payment through UCO Bank.
The US waiver will give India, which has been reeling under high oil prices, a breather. The prices would have further gone up in November and December had Iran crude been out of the market. “Because of trade war, uncertain situations in emerging markets and slowdown in consumption due to high oil prices, demand is expected to moderate by 300,000-400,000 bpd (barrels a day) by the middle of next year,” said Debasish Mishra, partner at Deloitte Touche Tohmatsu in India.
Besides, crude oil purchase from Iran makes economic sense for India since it gets extra credit period for Iranian crude.
After crossing $80 a barrel last month, crude price came down in November and was seen at $73.13 a barrel at one point on Friday. The rise in crude oil prices had led to an increase in retail prices of petrol and diesel in India, causing concern for the government. Indian basket crude oil prices too came down to $73.09 a barrel on Friday.
In 2018, crude oil demand globally increased to 1.7 million bpd, compared with an average of 1.5 million barrels a day during the last two years. Had the waiver not happened, the oil market would have tightened as companies would have opted out of Iran imports fearing US sanctions. By March 2019, the global demand is likely to taper down to around 1.3 mbpd.