India Resumes Iranian Oil Imports After Seven-Year Hiatus Amid Middle East Turmoil
In a significant development for global energy markets, Indian refiners have secured their first purchase of Iranian crude oil in seven years, breaking a prolonged hiatus that began in 2019. This move comes as the ongoing Middle East crisis disrupts oil supply chains, particularly through the critical Strait of Hormuz, impacting India's energy security.
Government Clarifies No Payment Hurdles for Iranian Crude
The Indian petroleum ministry has issued a statement dismissing reports of payment-related issues that allegedly diverted an Iranian oil shipment to China. The ministry labeled such claims as "factually incorrect" and emphasized that Indian companies face no obstacles in importing Iranian crude. "Amid Middle East supply disruptions, Indian refiners have secured their crude oil requirements, including from Iran; and there is no payment hurdle for Iranian crude imports," the ministry stated.
Further reassuring the public, the ministry confirmed that India's crude oil needs for the coming months are fully secured. The country imports oil from over 40 nations, with refiners enjoying full flexibility to source based on commercial considerations.
Historical Context: Why India Stopped Buying Iranian Oil
India was once a major buyer of Iranian crude, with imports peaking at around 11.5% of its total oil purchases. In 2018, the country imported approximately 518,000 barrels per day of Iranian oil. However, imports declined sharply after the United States tightened sanctions in 2019, forcing a complete halt to trade by May of that year.
- Between January and May 2019, imports dropped to about 268,000 barrels per day during a sanctions waiver period.
- After the US ended exemptions, imports fell to zero, prompting India to diversify its sourcing to suppliers in the Middle East, the United States, and more recently, Russia.
Current Crisis and Strategic Shifts in Oil Sourcing
The escalating conflict in West Asia has tightened global oil supplies, with nearly 35–40% of India's crude imports passing through the disrupted Strait of Hormuz. This has increased urgency for India to secure alternative and reliable supplies. To offset potential shortages, India has ramped up purchases of Russian crude, buying nearly 30 million barrels in a single week after the conflict intensified, according to data from Kpler.
Energy experts suggest that if the US were to allow limited "unsanctioned" trade of Iranian oil at sea, it could provide India with another crucial supply source. Sumit Ritolia, Lead Research Analyst at Kpler, highlighted that India has historically been a major buyer due to strong refinery compatibility and favorable commercial terms. "India could emerge as a key demand centre to watch, alongside Chinese buyers and other Asian countries," he said.
Additional Developments: Iranian LPG Imports and Storage
Apart from crude oil, India has also received Iranian liquefied petroleum gas (LPG). The ministry confirmed that a vessel carrying around 44,000 metric tonnes of Iranian LPG berthed at the western port of Mangalore on April 2 and is currently discharging fuel. Additionally, an estimated 95 million barrels of Iranian oil are currently stored on vessels at sea, with a waiver expected to remain in place until April 19.
This resumption of Iranian oil imports marks a pivotal moment in India's energy strategy, as the nation navigates global geopolitical tensions to ensure stable and secure fuel supplies for its growing economy.
