India is looking at reducing oil imports from Iran and replacing them with more purchases from Saudi Arabia and Kuwait after the US reimposed sanctions on the country in the Persian Gulf over its nuclear programme, government and industry officials said yesterday.
The petroleum ministry held discussions with oil refineries yesterday and will follow them up with meetings with the external affairs ministry next week and “clarity will emerge in a week's time”, an official said.
While a final view on the US asking India to cut their exposure to Iranian oil imports has not yet been taken, the Indian petroleum ministry has asked domestic refineries to start looking at alternatives, they said.
Bringing down imports from Iran to zero, as wanted by the US, may however not be feasible, the officials said.
Replacing Iran, which is India's third largest oil supplier behind Iraq and Saudi Arabia, will not be a problem but margins will be hit as Tehran offers the best commercial terms, another official said.
High sulphur crude from the Middle-East, particularly from Saudi Arabia and Kuwait, can easily replace quantities being bought from Iran, he said, adding that Latin America and the US were optional sources.
India imported 22 million tonnes of crude from Iran last year, a fall of five million tonnes from 2016.
Indian banks have already advised their customers to wrap up current transactions with Iran by August before the American sanctions kick in from November.