NEW DELHI: Indian refiners cut imports of Iranian oil last month as they started weaning their plants off crude from the country to avoid sanctions by the United States that are set to take effect in November.
India’s monthly oil imports from Iran declined to 592,800 barrels per day (bpd) in June, down 16 percent from May, according to data from industry and shipping sources.
The United States in May said it would reimpose the sanctions after withdrawing from a 2015 agreement with Iran, Russia, China, France, Germany, and Britain, where Tehran agreed to curb its nuclear activities in return for the lifting of earlier sanctions.
The government of India, Iran’s top oil client after China, asked refiners last month to prepare for drastic reductions or even zero Iranian oil imports.
The first set of sanctions will take effect on Aug. 6 and the rest, notably in the petroleum sector, following a 180-day “wind-down period” ending on Nov. 4.
U.S. officials said in June they would push countries to reduce their Iranian oil imports to zero. The Indian refiners will want to comply with the limits to maintain their access to the U.S. financial system.
“Trump administration will push for zero crude, condensate and products exports from Iran,” said Sri Paravaikkarasu, Head of East of Suez Oil at energy consultancy FGE. “The zero tolerance policy and the pace with which it is moving no doubt concerns Iran’s current crude buyers.”
Overall, India’s oil imports in June rose 10.1 percent from a year ago to 4.82 million bpd, the data showed. Overall purchases climbed on a higher intake of crude from Mexico, the United States and Azerbaijan. Imports from other Middle East suppliers also increased.
Lower purchases by private refiners dragged down India’s June imports from Iran although state refiners stepped up purchases.