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Iran Overtakes Saudi Arabia to Become Second Largest Oil Supplier to India Amid US Sanctions Threat

The US, which in May pulled out of a landmark nuclear deal and said sanctions will be re-imposed on Iran within 180 days, has threatened to cut off access to the American banking system for foreign financial institutions that trade with Tehran.

PTI

Updated:July 23, 2018, 5:59 PM IST
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Iran Overtakes Saudi Arabia to Become Second Largest Oil Supplier to India Amid US Sanctions Threat
Iran President Hassan Rouhani with Prime Minister Narendra Modi. (File Picture)

New Delhi: Iran overtook Saudi Arabia to be the second largest supplier of crude oil to Indian public sector firms during the first three months of current fiscal, Oil Minister Dharmendra Pradhan said on Monday.

Indian PSUs, which last fiscal cut oil imports from Iran by a quarter, bought 5.67 million tonnes of crude oil from the Persian Gulf nation during April-June, higher than imports from Saudi Arabia. Imports from Iran were only second to Iraq.

Oil marketing companies (OMCs) had bought 9.8 million tonnes of crude oil in the full 2017-18 fiscal as compared to 13.04 in the previous 12 months, he said in a written reply to a question in the Lok Sabha here.

During first three months of 2018-19 fiscal year that began from April, the state-owned firms bought 5.67 million tonnes of crude oil from Iran for Rs 19,978.46 crore (USD 2.95 billion), he said.

State firms that buy oil from Iran include Mangalore Refinery and Petrochemicals Ltd (MRPL), Indian Oil Corp (IOC) and Hindustan Petroleum Corp Ltd (HPCL).

Extrapolating the 2018-19 purchases come to 25 million tonnes but there are now US sanctions against Iran which block financial channels and payment routes.

"On May 8, 2018, the USA announced that it is walking out of the Joint Comprehensive Plan of Action with Iran and released a Frequently Asked Questions regarding the re-imposition of sanctions on entities engaged with Iran, including import of crude oil from Iran," he said.

Pradhan, however, did not answer the question if the government has asked oil companies to reduce imports from Iran.

"Indian refineries import crude oil from diverse sources including Iran, depending on technical and commercial considerations," he said.

To the question on oil from alternative countries being available on the same commercial terms as that from Iran, he said: "Oil PSUs import crude oil mainly keeping in view the domestic requirement. The price of crude oil is determined by many factors, including quality and demand and supply in the global market."

The US, which in May pulled out of a landmark nuclear deal and said sanctions will be re-imposed on Iran within 180 days, has threatened to cut off access to the American banking system for foreign financial institutions that trade with Tehran.

Iran was India's second biggest supplier of crude oil after Saudi Arabia till 2010-11 but western sanctions over its suspected nuclear programme pushed it to the 7th spot in the subsequent years. Sourcing from Iran increased following the lifting of sanctions and it was the third largest supplier in 2017-18.

Pradhan said Iraq supplied 7.27 million tonnes of crude oil to OMCs during April-June while Saudi Arabia sold 5.22 million tonnes.

During 2017-18, Indian state-owned firms bought 29.66 million tonnes of crude oil from Iraq and 19.35 million tonnes from Saudi Arabia. The volumes from Iraq were 24.79 million tonnes in 2016-17 and 18.01 million tonnes from Saudi Arabia.

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| Edited by: Padmaja Venkataraman
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