India slashed its Iranian oil imports in February to a one-and-a-half-year low to keep annual volumes from Tehran near the previous fiscal year's levels and within the limits allowed under a deal aimed at curtailing the OPEC nation's nuclear programme.
India, Iran's top client after China, shipped in about 102,200 barrels per day (bpd) of crude and condensate from Tehran in February, the lowest since July 2013, and down 63 per cent from January and 62 per cent from a year ago, according to tanker arrival data from trade sources and ship tracking services on the Thomson Reuters terminal.
The cuts follow smaller but still sharp reductions in January. The two months of lower shipments came after New Delhi instructed Mangalore Refinery and Petrochemicals (MRPL), Essar Oil and Indian Oil Corp to "virtually halt" Iranian oil imports in February-March.
Refiners in India had raised imports during April-December - the first nine months of this fiscal year - by more than 40 per cent, leading US authorities to raise an alarm with India's foreign ministry ahead of President Barack Obama's visit to New Delhi in January, a source involved in the talks said.
New Delhi wants to keep its average oil imports from Iran at 210,000-220,000 bpd or about 11 million tonnes in the year to March 31, 2015, to meet the terms of a temporary deal that asks buyer nations to retain purchases from Tehran at 2013 levels.
The deal brokered by six world powers and Iran in November 2013 eased some sanctions on Tehran in exchange for curbs to the Islamic republic's nuclear programme, capping its oil exports at around 1 million-1.1 million bpd.
The powers - the United States, Russia, China, Britain, France and Germany - are now working with Iran towards a final agreement on sanctions and its disputed uranium enrichment activities, aiming to reach a political understanding by the end of March and a lasting agreement by a June 30 deadline. Two earlier deadlines have been missed.
The West is worried that Iran's nuclear activities are aimed at making a weapon. Tehran says its uranium enrichment programme is only for power generation.
Over April-February India's oil imports from Iran averaged about 240,000 bpd, or nearly 11 million tonnes, leaving little room for further imports in March.
The April-February imports from Iran were up 16 per cent compared with 206,800 bpd imported in the same period of the previous fiscal year, the data showed.
"So far there are no cargoes booked from Iran or Dalian in China for voyage to India (for March arrivals)," a trade source said. Iran has leased oil storage at Dalian in China from which it can supply regional clients.
MRPL had to buy additional oil from Kuwait and Saudi Arabia for February and March to make up for the reduced Iranian oil imports, said an industry source. The company has also booked Iraq's Basra light for March loading from spot markets to replace crude from Iran.
MRPL Managing Director H. Kumar declined to comment on any additional purchases from Kuwait and Saudi Arabia.