Middlemen Offer Iranian Oil to Indian Refiners After US Waiver, Traders Say

• NIOC and traders from Singapore and Dubai are offering Iranian oil to Indian refiners at $3-4 per barrel discount versus similar regional grades on a landed basis
• Indian refiners have limited capacity to absorb new Iranian crude through August as they have already secured supplies and Middle Eastern suppliers are pressing them to honor annual contractual commitments
• Payment mechanisms and banking channels remain unclear, though India received two Iranian oil cargoes in April under a previous 30-day waiver

Summary: Indian Refiners Approached with Discounted Iranian Oil Following US Sanctions Waiver

Following a 60-day US sanctions waiver announced Monday, June 25, multiple intermediaries have offered Indian refiners discounted Iranian crude oil. The waiver stems from initial talks under a nascent peace deal, creating a temporary window for renewed energy trade.

Key Players and Offers:

• National Iranian Oil Co (NIOC) is directly approaching Indian refiners
• Small to mid-sized trading companies based in Singapore and Dubai are acting as intermediaries
• Iranian crude is being offered at $3-4 per barrel discount versus similar regional grades on a landed basis
• Discussions also include potential supplies of liquefied petroleum gas (LPG)

Market Challenges:

Indian refiners have limited capacity to absorb Iranian crude in the near term, as most have secured supplies through August and face pressure from Middle Eastern term suppliers to honor annual contracts. Payment mechanisms and banking channels remain unclear, potentially delaying commercial negotiations.

Trade Context:

• India received two Iranian oil cargoes in April under a previous 30-day waiver
• India had already been importing limited Iranian oil through traders
• Iran was India's second-largest oil supplier in 2010/11 before US sanctions forced reductions
• India completely halted Iranian crude imports in May 2019

Outlook:

While flows could increase under the current waiver, one refining source indicated priority would be given to direct NIOC purchases over intermediaries. Iranian Petroleum Minister Mohsen Paknejad visited New Delhi this week to discuss potential supply arrangements. The 60-day waiver timeline creates urgency for establishing workable payment solutions.