Indian Refiners Unlikely to Boost Iranian Crude Buys Despite US Sanctions Waiver

New Delhi: Indian refiners are unlikely to significantly increase purchases of Iranian crude despite a temporary easing of US sanctions, as uncertainty over the duration of the waiver, payment constraints, and existing supply commitments limit the scope for new buying, according to a market analyst.

The United States has provided a 60-day sanctions waiver that temporarily allows Iranian crude exports, but the short timeframe is unlikely to trigger a broad return of buyers beyond China, said Sumit Ritolia, who models refinery and oil markets at Kpler.

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Indian refiners have already secured much of their crude requirements for the coming months, with procurement plans typically finalised two to three months in advance, Ritolia said.

Historically, India was a major buyer of Iranian crude, importing significant volumes of Iranian Light and Heavy grades due to strong refinery compatibility and favourable commercial terms. Following sanctions tightening in 2018, imports ceased from May 2019, with volumes replaced by Middle Eastern, US and other grades. At peak, Iranian crude accounted for 11.5 per cent of India's total imports.

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State-run and private refiners are currently sourcing cargoes for late August and September, with Russian and Middle Eastern grades continuing to dominate purchases. Venezuelan crude has also been gaining market share.

While refiners could make opportunistic purchases if Iranian crude is offered at steep discounts, existing supply availability from Russia and the Middle East reduces the need to alter procurement strategies, he said. "Opportunistic purchases are possible if discounts become highly attractive, but the overall scope appears limited."

Another deterrent is policy uncertainty. Refiners are unlikely to commit significant volumes while US sanctions policy remains subject to rapid changes, making it difficult to ensure continuity of supply over the life of long-term contracts.

Payment mechanisms remain the biggest operational hurdle, alongside insurance, shipping and logistics arrangements, Ritolia said. Even if sanctions relief allows cargoes to move, refiners need confidence that payments can be settled without regulatory complications.

The analyst also pointed to a similar sanctions waiver issued in March, which resulted in little participation from buyers outside China because payment and compliance challenges persisted.

Western refiners are also unlikely to buy Iranian crude within the current waiver period, he said, as the entire supply chain - from compliance approvals and contract negotiations to shipping, refining and payment settlement - would need to be completed within 60 days.

Voyage times from Iran alone can stretch to 40-45 days for some destinations.

"The waiver may have reopened the door for Iranian exports, but that does not automatically create a broad pool of buyers," Ritolia said, adding that China is likely to remain the principal destination for Iranian crude unless sanctions relief becomes more durable.