India has not taken a firm stand on the Iranian oil imports versus risk of US sanctions debate yet, but the country's largest fuel retailer - and one of Iran's biggest customers - is reportedly "fully-prepared" for all scenarios. "We have a very wide crude basket. There's nothing we can't procure, there's nothing we can't process," Indian Oil Corp. Chairman Sanjiv Singh told Bloomberg. "So, even if Iran supplies get disrupted, the supplies to the Indian market will still continue. That's assured." According to him, Saudi Arabia alone can cover most of the world's supply shortfall.
The oil shipments from Iran, India's third largest oil supplier, actually add up to a whopping figure. India imported 771,000 barrels of crude oil a day from Iran in May, a 35 per cent increase from the previous month, based on tanker tracking and shipping data compiled by Bloomberg. Iran had also figured significantly in IOC's plans for the current fiscal. In May, AK Sharma, IOC's director of finance, had reportedly said that the company planned to buy 7 million tons of crude from Iran in the current year versus 4 million tons in the previous fiscal.
However, according to Singh, IOC has enough alternative sources of crude to turn to, especially due to the narrowing spread between Brent crude and Dubai oil. Citing data from broker PVM Oil Associates, the report added that Brent was trading at a premium of $3.58 a barrel to Dubai crude on Monday. Back in April, Brent had hit an almost four-year high of $4.64 a barrel. This will allow IOC to look beyond the Middle East for sourcing oil, if required.
Singh also told the news agency that "there's no need that we replace high sulfur [which is the case with Iran oil] with high sulfur". That's because IOC boasts the ability to process 175 different varieties, boosting flexibility in oil sourcing. It not only added 16 new grades of crude during 2017-18 but has also expanded the capabilities of its refineries to process cheaper and heavier grades, which make up close to 60 per cent of its crude diet. "We have Plan B, Plan C, Plan D. We are fully prepared," said Singh, adding that the situation is changing every day so IOC has to "wait and watch how things unfold with time."
India certainly has been sending mixed signals on the US diktat to stop all oil imports from Iran from November 4. India initially said that it only recognises UN sanctions, not unilateral restrictions imposed by the United States. Last month, according to Reuters, the country was also looking to revive a rupee trade mechanism to settle part of its oil payments to Iran, and was awaiting the RBI's decision.
To remind you, when US sanctions were previously imposed on Iran in 2012, India had devised a barter-like scheme - acceptable to Washington - to allow it to make some oil payments to Tehran in rupees through a small state bank. Iran used the funds to import goods from India. However, the petroleum ministry last week asked refiners to tread cautiously and start looking at alternatives.
In the meantime, Iran has asked fellow OPEC members to "refrain from any unilateral measures" to increase oil production beyond the 1 million additional barrels of crude a day it already agreed to at the last OPEC meet. Iranian President Hassan Rouhani is currently on a Europe tour to secure continued support for the landmark 2015 nuclear deal that US President Donald Trump backed out of in May.
On Sunday, Iran's first Vice President Eshaq Jahangiri declared that his country's crude oil will be available on Iran's domestic stock market for private companies to buy and export, though he did not offer specifics for the plan. "If any country attempts to take Iran's place in the oil market in this battle, we will consider it a big treachery to the Iranian nation and the world community and they will surely pay for this betrayal someday," he added.
With PTI inputs