Published: Sun, September 23, 2018
Finance | By Loren Pratt

India Oil Firm Cancels Imports from Iran

India Oil Firm Cancels Imports from Iran

Many refiners in Japan, the world's fourth-biggest oil consumer, say they are also resigned to completely halting imports from one of their historically important suppliers, unlike during a previous round of sanctions when they only reduced imports from Iran.

This has forced the refiner to cancel a scheduled loading of 1 million barrels in October, they said.

India is yet to take a call on complying with the USA sanctions on Iran.

During 2011-2015, India reduced its purchases of Iranian oil, at some cost to its own development, in order to receive from the USA administration exemptions from sanctions, the CRS said.

The company is ending the relationship in order to keep its insurance coverage once new sanctions against Iran by the United States take effect. The rupee-rial arrangement was used to buy oil from Iran before sanctions were lifted against it three years ago.

Among the financial pathways under discussion in Brussels and other capitals: Devising an alternative - free from US influence - to the current electronic system used to transfer money from place to place, European officials told NBC News.

Oil accounts for almost 80 per cent of Iran's tax revenue, according to the International Monetary Fund, making petroleum the regime's economic lifeblood.

At present, Indian companies are using Euro payment mechanism of the State Bank of India and Germany-based Europaeisch-Iranische Handelsbank AG. These channels would get blocked from November.

Earlier, India was looking at the possibility of falling back on the rupee-rial arrangement for importing oil from Iran in the wake of U.S. sanctions.

State-owned refiner Hindustan Petroleum Corp has already halted purchases due to insurance problems, while Bharat Petroleum Corp boosted Iranian purchases earlier this year and expects to sharply cut Iranian flows once the sanctions take effect.

However, recent proposals by the Europeans seem practical, he said, adding that "we're looking for mechanisms to continue economic cooperation with them".

"Iranian oil exports are coming down pretty hard", said Roger Diwan, a veteran oil analyst at consultant IHS Markit Ltd.

Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of substitute crudes - Saudi Arabia, Kuwait, Iraq, Nigeria, and the US. SBI has told refiners it would stop handling Iran payments from November.

This is published unedited from the PTI feed.

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