India cuts Iranian oil imports by 16% in June to 592,800 bpd

Refiners cut imports of Iranian oil last month as they started weaning their plants off crude from the country to avoid sanctions by the United States that are set to take effect in November. The monthly oil imports from Iran declined to 592,800 barrels per day (bpd) in June, down 16 per cent from May, according to data from sources. The United States in May said it would re-impose the sanctions after withdrawing from a 2015 agreement with Iran, Russia, China, France, Germany, and Britain, where Tehran agreed to curb its nuclear activities in return for the lifting of earlier sanctions.

The government asked refiners last month to prepare for drastic reductions or even zero Iranian oil imports. India is Iran’s top oil client after China.

The first set of sanctions will take effect on August 6 and the rest, notably in the petroleum sector, following a 180-day “wind-down period” ending on November 4.

US officials said in June they would push countries to reduce Iranian oil imports to zero. The refiners will want to comply with the limits to maintain their access to the US financial system. “Trump administration will push for zero crude, condensate and products exports from Iran,” said Sri Paravaikkarasu, Head of East of Suez Oil at energy consultancy FGE. “The zero tolerance policy and the pace with which it is moving no doubt concern Iran’s current crude buyers.”

 

Overall, the oil imports in June rose 10.1 per cent from a year ago to 4.82 million bpd, the data showed. Lower purchases by private refiners dragged down June imports from Iran although state refiners stepped up purchases.

State refiners, accounting for about 60 per cent of nearly 5 million bpd of refining capacity, lifted 10 per cent more Iranian volumes in June compared to May, at about 454,000 bpd, the data from the sources showed. The sources declined to be identified.

On a yearly basis, India’s imports from Iran were 19.5 per cent higher.

State refiners had cut Iranian oil imports in the 2017/18 financial year because of a dispute over the development rights for an Iranian natural gas field.

However, the refiners raised imports in the current fiscal year after Iran offered free shipping and an extended credit period of 60 days.

For the first six months of 2018, India’s Iranian oil imports increased by 8.4 per cent to 585,000 bpd.

In April to June 2018, the first quarter of this fiscal year, India’s oil imports from Iran rose by about 24 per cent from the previous quarter to about 647,000 bpd, the data showed.

Imports by state refiners during the period more than doubled to about 413,400 bpd from 191,700 bpd, the data showed.

Refiners will likely gain more clarity on how much the US would like them to cut after a meeting with officials scheduled for July 16 to 17, said an official with a state-run refiner on the condition of anonymity.