Iranian oil offered to India at premium to Brent: Report

Traders have offered Iranian oil to Indian refiners at a premium to ICE Brent following a temporary removal of sanctions by Washington to ease the energy crisis caused by the US-Israeli conflict with Iran, according to three industry sources who told Reuters.

India has not received any crude shipments from Tehran since May 2019 due to pressure from the United States to avoid buying Iranian oil.

However, the ongoing war on Iran, now in its fourth week, has disrupted energy shipments through the Strait of Hormuz, affecting India’s fuel supply. Indian refiners have about a month to maximise purchases of oil and liquefied petroleum gas (LPG) from Iran, which is geographically close to India.

Indian refiners have already procured millions of barrels of Russian oil after the US lifted sanctions on Moscow’s crude to help curb rising oil prices. Alongside oil shortages, India is also facing a severe shortage of LPG, which is primarily used for cooking.

Sources said that traders and the National Iranian Oil Company (NIOC) are seeking payments in dollars, with some willing to accept payments in Indian rupees. The sources spoke on condition of anonymity as they were not authorised to speak to the media.

The current energy crisis is considered worse than the oil shocks of the 1970s combined, according to Fatih Birol, executive director of the International Energy Agency. On Friday, the Trump administration issued a 30-day sanctions waiver for the purchase of Iranian oil already at sea, US Treasury Secretary Scott Bessent said.

The waiver applies to oil loaded on any vessel, including those under sanctions, on or before March 20 and discharged by April 19, as per the Office of Foreign Assets Control. Iranian oil has been offered at a premium of $6-$8 per barrel over ICE Brent, with payment expected within seven days of cargo arrival.

Indian refiners are cautious about the payment mechanism before finalising deals with NIOC, as Iran remains cut off from the SWIFT payment system. Sujata Sharma, joint secretary in the federal oil ministry, said at an energy conference that any decision to buy Iranian fuel would be a “techno-commercial decision” made by oil companies.