India Halves Its Oil Purchases from Iran

On Friday, September 23, Reuters reported that Indian refineries will reduce their oil purchases from Iran by 45% for this month and the next. According to industrial and official sources, India will buy between 360,000 to 370,000 barrels of oil per day from Iran in September and October, while the average oil imports from the Islamic Republic during the months of April to August were about 658,000 barrels. The United States exited the JCPOA on May 8. Last month, it implemented financial and industrial sanctions against Iran, and in November of this year, U.S. oil sanctions against the Islamic Republic will come into effect. All of Iran's customers have reduced their oil imports from Iran to obtain exemptions from the sanctions, although some, like South Korea, have completely stopped buying oil from Iran, while others have significantly reduced their purchases. Reuters writes that the Indian oil minister warned the country's refineries in June to be prepared for a 'significant reduction or complete halt of oil purchases from Iran.' The U.S. expects Iran's customers to bring their oil purchases to zero, but reports indicate that the United States has currently accepted a reduction of Iran's exports by half until November. Last year, Iran had a total of 2.1 million barrels of crude oil and 400,000 barrels of gas condensate in daily exports. Since the U.S. withdrawal from the JCPOA until last month, Iran's daily oil exports decreased by 500,000 barrels, and according to shipping and industrial statistics, this month will see another decrease of 550,000 barrels. Amrita Sen, a senior analyst at Energy Aspects, told Reuters that some Indian refineries have either terminated their oil contracts with Iran or imported a significant portion of the oil volume stated in the contracts before the sanctions began, so they could halt purchases from the Islamic Republic if necessary. India's financial year roughly coincides with Iran's solar year, and one-year oil purchase contracts are signed starting in March. U.S. Secretary of State Mike Pompeo recently announced that exemptions from sanctions have been considered for some of Iran's customers, like India, but ultimately all of them must completely stop purchasing oil from the Islamic Republic in the future. Reuters writes that India prefers not to completely stop buying oil from the Islamic Republic due to the depreciation of its national currency (India pays in rupees instead of dollars and euros for Iranian oil), as well as the high prices of gasoline and other fuels. Iran also covers the costs of insurance and transportation of oil to China and India. Government sources told the news agency that during meetings last week between U.S. and Indian officials, the New Delhi government explicitly raised this issue, and it was agreed that Washington would review India's exemption from sanctions. These officials stated that India has good relations with both the U.S. and Iran and seeks a policy that ultimately serves the interests of Indian refineries and people. They also mentioned that if the U.S. does not show flexibility, Indian refineries will have no choice but to stop buying oil from Iran.