Middlemen offer Iranian oil to Indian refiners after US waiver, traders say

• Traders from Singapore and Dubai, along with NIOC directly, are contacting Indian refiners to sell discounted Iranian oil following Washington's temporary sanctions waiver
• Indian refiners have limited capacity to absorb Iranian crude immediately as most have secured supplies through August and Middle Eastern suppliers are pressing buyers to honor annual contracts
• Iran was India's second-largest oil supplier in 2010/11 before U.S. sanctions forced India to halt crude imports from Tehran in May 2019; India received two Iranian cargoes in April 2024 after a previous 30-day waiver

Summary

Key Development: Following a 60-day US sanctions waiver announced Monday, June 25, middlemen and Iran's National Iranian Oil Co (NIOC) are offering discounted crude oil to Indian refiners as Tehran seeks to expedite sales.

Pricing and Terms: NIOC is offering Iranian crude at $3-4 per barrel below comparable regional grades on a landed basis. Offers are coming directly from NIOC and through small to mid-sized trading intermediaries based in Singapore and Dubai.

Market Constraints: Indian refiners face near-term absorption challenges as most have secured supplies through August and Middle Eastern term suppliers are pressing buyers to honor existing annual commitments. Additionally, payment mechanisms and banking channels remain unclear, potentially delaying commercial negotiations.

Historical Context: Iran was India's second-largest oil supplier in 2010/11 before US sanctions forced India to halt Iranian crude imports in May 2019. India received two Iranian oil cargoes in April following a previous 30-day sanctions waiver.

Additional Discussions: Potential supplies of crude and liquefied petroleum gas (LPG) were discussed during Iranian Petroleum Minister Mohsen Paknejad's recent visit to New Delhi.

Market Implications: While the sanctions waiver opens a window for renewed energy trade, India had already been importing some Iranian oil through traders, and these flows could increase. However, the temporary 60-day nature of the waiver and unresolved payment infrastructure issues create uncertainty around the scale and sustainability of resumed trade. Refiners are prioritizing direct deals with NIOC over intermediaries.