India is continuing to import Iranian crude oil despite US pressure, through an arrangement under which Iran supplies tankers and insurance after shipping companies including Shipping Corp of India (SCI) stopped sending ships to Iran due to US sanctions, reports Reuters.
China is doing something similar and like India is keeping Iranian oil flowing by using ships owned by National Iranian Tanker Co (NITC).
The desire of the top two buyers of Iranian oil to keep it flowing is unlikely to cut off Iran from the global oil markets when US sanctions against its petroleum sector start in November.
President Trump withdrew from the 2015 nuclear deal signed between Iran and six world powers and ordered reimposition of sanctions saying that anyone trading with Iran will not do business with US.
An SCI official told Reuters that they face a similar situation faced by western shippers because without insurance cover they can't sent their vessels to Iran.
India turned to NITC after insurers and reinsurers stopped services for Iran, to avoid being snared in sanctions as they have a large business presence in the US.
SCI had contract to import Iranian oil for Mangalore Refinery and Petrochemicals Ltd (MRPL) till August.
Eurotankers had a deal with MRPL to import two oil cargoes every month from Iran but it has refused to undertake any voyages there to fetch oil from September onwards.
A government official told Reuters that the shipping ministry has allowed refiners to buy oil from Iran on cost, insurance and freight (CIF) basis.
Under this arrangement, shipping and insurance will be arranged by the Iranians allowing refiners to continue purchasing the country's oil.
This will benefit Indian Oil Corp, Bharat Petroleum Corp Ltd and MRPL, which plan to keep importing Iranian oil for the rest of the fiscal year ending on March 31, 2019.
Iran is offering almost free shipping and extended credit period to keep India importing oil.
State refiners imported a record 7,68,000 barrels of oil per day from Iran in July and had planned to nearly double oil imports from Iran in 2018-19.
India will finalise its strategy on crude purchases from Iran after a meeting with top US officials this week.
