Indian Oil Corporation Ltd. is working on a strategy to ensure India’s oil supply doesn’t get impacted by America’s decision to withdraw from the Iran nuclear deal and reimpose sanctions on the Middle-East nation.
The chairman of India’s largest refiner said that the IOC is working on alternative strategies for crude oil purchases to offset potential cut in imports from Iran, which is India’s third-biggest oil supplier.
“Last time during the Iran sanctions, we were given some window (and) we made some payments,” Sanjiv Singh said at a conference to announce IOCL’s quarterly earnings. “Now, it very much depends on how everything unfolds.”
According to a DBS report released in May, China and India are the two largest importers from Iran, together accounting for 1.4 million barrels per day. To boost demand for its oil, Tehran recently deepened freight discount to firms in India, which is also the world’s third-biggest oil consumer.
U.S. Secretary of State Mike Pompeo yesterday said that Washington will impose “the strongest sanctions in history on Iran once they come into full force”. The sanctions may force India to look at other options, the DBS report said.
“We don’t need any assurances from Saudi Arabia (on global crude production),” said AK Sharma, director (finance) of IOCL. “We will be able to address any supply shortfall through the most economic options.”
Sharma said that the payment channel to Iran is still open. “We make payments in euros, which are routed from State Bank of India to Germany-based bank Europaeisch-Iranische Handelsbank AG (EIH),” he said.
China may use the yuan to import from Iran while India may seek waivers from the U.S. or go back to using a mix of barter and gold to settle payments, DBS said.