India and Asian Refiners Seek Iranian Oil After US Sanctions Relief

Rising Interest in Iranian Oil Amid U.S. Sanctions Relief

Indian refiners are considering resuming purchases of Iranian oil, with some already preparing to take action as the United States temporarily lifts sanctions to address an energy crisis triggered by the ongoing conflict between the U.S. and Iran. This development has sparked interest among refiners across Asia, who are now assessing the potential to buy Iranian crude.

Three Indian refining sources have indicated their intention to purchase Iranian oil but are waiting for further guidance from the government and clarity on payment terms from Washington. India, which maintains smaller crude stockpiles compared to other major Asian oil importers, quickly moved to secure Russian oil after recent U.S. sanctions relief. However, the Indian government was not immediately available for comment outside regular office hours.

Other Asian refiners are also exploring the possibility of purchasing Iranian oil, according to several individuals familiar with the situation. The Trump administration recently issued a 30-day sanctions waiver for the purchase of Iranian oil that is already at sea, as confirmed by U.S. Treasury Secretary Scott Bessent. This waiver covers oil loaded on any vessel, including sanctioned tankers, on or before March 20 and scheduled for discharge by April 19. It marks the third time since the start of the war that the U.S. has temporarily lifted sanctions on Iranian oil.

Unlocking Millions of Barrels of Oil

Approximately 170 million barrels of Iranian crude are currently at sea, according to Emmanuel Belostrino, Kpler’s senior manager for crude oil market data. These barrels are spread across ships ranging from the Middle East Gulf to waters near China. Energy Aspects, a consultancy, estimated on March 19 that between 130 million and 140 million barrels of Iranian oil are on water, equivalent to less than 14 days of current Middle East production losses.

Asia relies heavily on the Middle East for 60% of its crude supply, and the near-closure of the Strait of Hormuz this month has forced refineries across the region to operate at reduced capacity and cut fuel exports. The Trump administration re-imposed sanctions on Iran in 2018 over its nuclear program. Since then, China has emerged as Iran’s primary client, with independent refiners purchasing 1.38 million barrels per day (bpd) last year, as reported by Kpler data. This increase was driven by deep discounts, as most countries avoided Iranian crude due to the sanctions.

Challenges in Acquiring Iranian Oil

Despite the potential for increased oil availability, there are several challenges that complicate the process of buying Iranian oil. One major issue is the uncertainty surrounding payment methods, as well as the fact that a significant portion of the oil is aboard aging “shadow fleet” ships, according to traders.

Additionally, some former buyers of Iranian oil were contractually obligated to purchase from the National Iranian Oil Co., as noted by two refining sources. However, since the U.S. reimposed sanctions in late 2018, much of the Iranian oil has been sold through third-party traders. A Singapore-based trader stated, “It usually takes some time to work through compliance, administration and banking, etc., but I guess people will try to work ASAP.”

The sources chose to remain anonymous due to company policy. Before the sanctions were re-imposed, other major buyers of Iranian crude included India, South Korea, Japan, Italy, Greece, Taiwan, and Turkey.