Reuters: Indian State Refineries Continue to Buy Oil from Iran

On Monday, September 3, Reuters reported, citing informed sources, that following the cessation of cooperation between Indian shipping companies and Iran due to concerns over U.S. sanctions, the Indian government has allowed state refineries to continue purchasing oil from Iran using Iranian tankers and insurance. Reuters states that this new action by the Indian government is similar to a move made by China, where Chinese buyers now transport their purchased crude oil from Iran using vessels from the National Iranian Tanker Company. Donald Trump, the President of the United States, announced on May 8 the decision for Washington to withdraw from the nuclear agreement with Iran, known as the JCPOA, and also stated that sanctions against Iran would be reinstated. The first phase of U.S. sanctions was implemented on July 13, and the second phase, which primarily targets Iran's oil industry, is set to be enforced starting November 4. U.S. officials claim they are working to reduce Iran's oil exports to zero by that time. Following the U.S. exit from the JCPOA, U.S. officials declared that 'anyone who trades with Iran will not deal with the United States.' Meanwhile, an official from the Indian shipping company stated in an interview with Reuters: 'We are in a situation similar to (most Western shipping companies) because no one is willing to provide us with coverage (insurance); therefore, we cannot cooperate with (Iran).' According to the report, following the initiation of U.S. sanctions, insurance and shipping companies, which are mainly European and American, have cut off their cooperation with Iran. Two informed sources, who requested anonymity, told Reuters that the Indian shipping company had a contract with the Mangalore Refinery and Petrochemicals for the transfer of Iranian oil until the end of August, which they are no longer willing to continue this month. They also added that European tankers had contracts for the monthly transfer of two tankers of Iranian oil to the Mangalore Refinery and Petrochemicals, which they announced they would not be willing to transfer Iranian oil for September. In this context, an Indian government official stated that the Ministry of Shipping has allowed refineries to purchase Iranian oil based on (cost, insurance, and freight). Reuters reports that under this contract, Iran provides vessels and insurance for the transportation of its oil to India, and now Indian refineries will be able to continue purchasing oil from Iran in the absence of coverage from Western insurance companies. According to the report, Indian refineries are eager to continue buying oil because the cost of transportation and insurance for these shipments will be considered almost free for them. Reuters further states that Indian state oil refineries, which reached a record daily purchase of 768,000 barrels of oil from Iran in July, are now looking to double their purchases for 2018 and 2019.