After about 7 years, Iranian oil has returned to India. According to ship-tracking data, two supertankers carrying Iranian crude oil have reached ports on both India's east and west coasts. This is the first such delivery in almost seven years. 'Felicity', a huge crude carrier operated by National Iranian Tanker Company, stopped anchoring near Sikka off the coast of Gujarat late on Sunday night. It was carrying approximately 2 million barrels of crude oil, which was loaded from Kharg Island in mid-March. Around the same time, another tanker, 'Jaya', grounded near Paradip off the coast of Odisha. It is also carrying about the same amount of crude oil that was taken off Kharg Island in late February – before the US and Israel launched military strikes against Iran, and Tehran retaliated.
These consignments are the first consignment of Iranian crude oil to reach Indian shores in almost seven years. This has become possible after the sanctions waiver issued by America last month. This one-month waiver allowed the sale of Iranian oil that was already on the way. Its objective was to reduce disruptions in global supply and control prices. However, after peace talks failed over the weekend, Washington announced a blockade of Iranian ports, aimed at curbing Tehran's income from oil exports. The names of the buyers of these consignments reaching Indian shores have not been formally disclosed.
Paradip Port is primarily operated by Indian Oil Corporation, which has confirmed buying at least one Iranian consignment under this concession. At the same time, Sikka is a major center of crude oil management for Reliance Industries and Bharat Petroleum Corporation; Both these companies are maintaining their own infra in this area. Late last month, a tanker named 'Ping Shun', carrying about 600,000 barrels of Iranian crude oil, was initially headed towards Vadinar in Gujarat. But, due to payment related problems, it was diverted to China midway. Had it reached Vadinar, the oil loaded on 'Ping Shun' would have been the first batch of Iranian crude to reach Indian shores in the last seven years.
Historically, India has been a major buyer of Iranian crude oil. Due to better refinery connectivity and favorable terms of trade, India imported large quantities of both light and heavy crude oil from Iran. After restrictions became more stringent in 2018, imports stopped completely from May 2019. Subsequently, that quantity of imports was compensated by crude oil coming from the Middle East, America and other sources.
At its peak, the share of Iranian crude in India's total oil imports reached 11.5 percent. India bought 518,000 barrels of oil per day from Iran in 2018, but this dropped to 268,000 barrels per day between January and May 2019, when the US gave exemptions to some buyers. There has been no import since then. The main grades of oil purchased by Indian refiners include Iran Light and Iran Heavy crude.
Last month, the US waived sanctions for 30 days on Iranian oil purchases at sea in its latest effort to keep oil prices low. Oil prices had increased due to the US-Israel war with Iran. This discount will end on April 19. It is estimated that about 95 million barrels of Iranian oil is present on ships at sea, of which about 51 million barrels can be sold to India, while the rest is more suitable for buyers in China and South-East Asia.
