Iranian oil is offered to India at premium to Brent, sources say

NEW DELHI/SINGAPORE: Traders have offered Iranian oil ‌to Indian refiners at a premium to ICE Brent after Washington temporary removed sanctions to ease the energy crisis caused by the U.S.-Israeli war on Iran, three industry sources said.

India, the world's third-biggest oil importer and consumer, has not received a cargo ​from Tehran since May 2019 after it came under U.S. pressure not to buy Iranian crude.

But ​India has been hit hard by the disruption of energy shipments via the Strait ⁠of Hormuz caused by the war on Iran, which is now in its fourth week.

Its refiners have ​a month to maximise purchases of oil and liquefied petroleum gas from Iran that is geographically close to ​India, the sources said. Indian refiners have already bought millions of barrels of Russian oil after the U.S. lifted sanctions on it to try to curb the surge in oil prices.

Apart from a lack of oil, India faces a severe shortage of ​LPG, primarily used for cooking.

Payments In Dollars Or Even Rupees

Traders and the National Iranian Oil Co are ​seeking payments in dollars, the sources said, adding that some parties are even willing to accept payments in Indian rupees.

The ‌sources could ⁠not be named because they were not authorised to speak to the media.

The current energy crisis is worse than the two oil shocks of the 1970s put together, Fatih Birol, executive director of the International Energy Agency, said on Monday.

The Trump administration on Friday issued a 30-day sanctions waiver for the purchase of Iranian oil already ​at sea, U.S. Treasury ​Secretary Scott Bessent said.

The ⁠waiver applies to oil loaded on any vessel, including tankers under sanctions, on or before March 20 and discharged by April 19, according to the Office of ​Foreign Assets Control.

Sources said Iranian oil has been offered at a premium of $6-$8 ​per barrel over ⁠ICE Brent, with payment settled within seven days of cargo arrival.

Indian refiners want to be sure about the payment mechanism before signing any deal with NIOC as Iran is cut off from the SWIFT payment system, they ⁠added.

Sujata Sharma, ​a joint secretary in the federal oil ministry, told reporters ​at an energy conference, any decision to buy Iranian fuel would be "a techno-commercial decision" on the part of the oil companies.