Published: Sat, September 22, 2018
Economy | By

A partly-Iranian refiner cancels Iran oil imports ahead of US sanctions

A partly-Iranian refiner cancels Iran oil imports ahead of US sanctions

In the first half of September, India's imports from Iran dropped to 114,267 bpd from 134,267 bpd for August 1-15, although purchases from Indian state refiners are expected to recover in the latter half of this month, according to Platts, which estimates that Indian imports averaged 428,710 bpd for the month of August. The other is the concern that tanker tracking data may become less reliable, as Iran may try to use some "unconventional" methods of keeping its oil sales on track, like switching off tracking devices on tankers-a "solution" that Tehran is said to have used in the previous round of sanctions in 2012-2015. India has increased oil purchases from Iran to almost pre-2012 levels after sanctions were lifted, and in May 2016 India agreed to transfer to Iran about $6.5 billion that it owed for Iranian oil shipments but which was held up for payment due to sanctions, it said. It has also been hoping that the U.S. will give it some relief from the sanctions.

South Korea, in turn, has replaced Iranian crude with imports from Saudi Arabia and Iraq, according to the energy ministry, but it is also in talks with the United States to get a waiver.

Stating that these conversations are ongoing, Principal Deputy Secretary of State for South and Central Asia Affairs Alice Wells said: "We are working very hard with our partners so that there are no disruptions in the market and adequate supply is available to substitute for Iranian oil". The remaining 45% payment was paid in rupees in accounts Iranian oil companies had with the UCO Bank.

India, which is the second-biggest buyer of Iranian oil, is also looking elsewhere for crude.

UCO Bank and IDBI Bank have been identified to route the payment as the two have no exposure to the U.S. financial system.

The official said Iran is open to accepting rupee payment for oil and may use the money to pay for equipment and food items it buys from India. It is now seeking support from allies to cut Iranian oil imports to zero soon after the sanction on the petroleum sanction commences in November.

India's attempts to attain an exemption from USA sanctions against Iran have not succeeded. The countries' diplomats say they fear the play will backfire, allowing Iran to blame an outside entity for the country's issues.

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