Why India is Refusing 2 Million Barrels of ‘Unannounced’ Iranian Oil
In a curious development amid the US blockade of Iran’s ports, an Iranian oil tanker estimated to be laden with about 2 million barrels of Iranian crude arrived unannounced close to Gujarat on Tuesday without a declared destination or buyer, according to ship tracking data and industry watchers.
While India has bought some Iranian barrels in view of the sanctions waiver issued by the US last month allowing sale of Tehran’s oil that was already loaded on tankers, Indian refiners are unlikely to pick up oil on this tanker. That is because the tanker was likely loaded after the US waiver’s cut-off date, sources indicated.
The tanker–very large crude carrier (VLCC) Derya–arrived in waters off Gujarat on Tuesday; it was likely loaded with Iranian oil on March 28, according to vessel tracking data from commodity market analytics form Kpler. The US sanctions waiver for Iranian oil allowed for purchase of Iranian oil that was already loaded on tankers before March 20. Since Derya was likely loaded after the cut-off date, accepting the oil it is carrying could attract secondary US sanctions on the buyer.
Moreover, the US has already announced that it will not be extending the sanctions waiver on Iranian oil. On Monday, the US Navy also began its blockade of Iranian ports after peace talks between Washington and Tehran failed over the weekend. With the blockade, which is aimed at hitting Iran’s earnings for energy exports mainly to China, it was expected that the US will not extend the sanctions waiver on Iranian crude.
Given these factors, industry sources said that Indian refiners are unlikely to touch these barrels and the tanker might find it difficult to get buyers elsewhere, except for perhaps China. Derya is a US-sanctioned tanker operated by Iran’s National Iranian Tanker Company (NITC), as per global shipping databases.
The tanker is likely to have crossed the Strait of Hormuz before the US started its blockade on Iranian ports on Monday. According to data from Kpler’s marine intelligence and data service MarineTraffic, Derya continued to be close to Gujarat as of Wednesday afternoon, having hardly moved since Tuesday.
Amid the West Asia war, the US on March 21 suspended for a month the sanctions on Iranian crude already loaded on tankers in a bid to allow as many barrels of oil as possible to flow into the international market to improve the global oil supply situation and curb spiralling crude oil prices. The waiver from Washington was similar to the one issued for Russian oil earlier in March; India’s Russian oil imports have surged since the war began. India hasn’t imported Iranian crude since May 2019 due to reimposition of US sanctions on Tehran by the first Trump administration.
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According to the general licence issued by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury on March 21, transactions related to the sale, delivery, or offloading of crude oil and petroleum products of Iranian origin – loaded on any vessel, including tankers sanctioned by the US, as of 12.01 eastern daylight time (9.31 am India time) on March 20 – are authorised until April 19.
Given the waiver, at least two tankers carrying Iranian oil and one tanker with Iranian LPG arrived at Indian ports over the past few days. These marked the first energy supplies to India from Iran in nearly seven years. Over the weekend, tankers Jaya and Felicity–both carrying Iranian oil–arrived in Indian waters. Jaya came to Paradip port with oil for Indian Oil Corporation (IOC), while Felicity came to Sikka port with oil for Reliance Industries (RIL), according to industry sources.
Earlier this month, the government confirmed that India is buying Iranian crude and there were no payment-related hurdles in buying Tehran’s oil, following the sanctions waiver for Iranian oil on water. “India imports crude oil from 40+ countries, with companies having full flexibility to source oil from different sources & geographies based on commercial considerations. Amid Middle East supply disruptions, Indian refiners have secured their crude oil requirements, including from Iran; and there is no payment hurdle for Iranian crude imports…,” the Petroleum Ministry had said in an April 4 post on social media platform X. It had also announced that a tanker carrying Iranian liquefied petroleum gas (LPG) was discharging cargo at the New Mangalore port.
Vessel movements through the Strait of Hormuz were effectively halted due to the conflict that began on February 28; Iranian oil shipments largely continued unabated though. The Strait accounted for one-fifth of global oil and liquefied natural gas (LNG) flows. Around 2.5–2.7 million bpd of India’s crude imports—around half of the overall oil imports—have transited the Strait in recent months, while the longer-term average is around 40%. India depends on imports to meet over 88% of its requirement of crude oil.
