As the U.S. sanctions on the import of Iranian crude oil loom large, India is engaged with the European Union for an alternative channel for making payments to Tehran for buying petroleum products, sources said Wednesday. As a result, Chennai Petroleum has to withdraw an order for a scheduled loading of 1 million barrels in October.
"Iranian oil exports are coming down pretty hard", said Roger Diwan, a veteran oil analyst at consultant IHS Markit Ltd.
The United States has demanded that nations cut all their Iranian oil imports when sanctions on the country's petroleum sector over Tehran's nuclear program are re-imposed on November 4.
In its report meant for USA lawmakers to take informed decision, the CRS said India and Iran have overlapping histories and civilisations, and they are aligned on several strategic issues.
India's attempts to attain an exemption from USA sanctions against Iran have not succeeded.
United India Insurance has informed Chennai Petroleum that its new annual policy that is set to take effect from October will not cover any liability related to processing crude from Iran, the three sources said.
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Indian insurers do not fall directly under the sanctions, but need to hedge their own risk on the Western reinsurance market, which will not accept Iranian exposure.
"Reinsurers have said they cannot provide full 100 percent cover".
He said that a ministerial meeting of JCPOA signatories, excluding the United States, on the sidelines of the upcoming United Nations General Assembly meeting could take "us to newer stages". "They have agreed to provide support for only 85 percent cover", said a second source, who also declined to be identified. The other is the concern that tanker tracking data may become less reliable, as Iran may try to use some "unconventional" methods of keeping its oil sales on track, like switching off tracking devices on tankers-a "solution" that Tehran is said to have used in the previous round of sanctions in 2012-2015.
Chennai Petroleum, a subsidiary of the country's biggest refiner Indian Oil Corp (IOC), has a deal to buy up to 2 million tons, or 40,000 bpd, of oil from Iran in the fiscal year 2018/19. Some sanctions took effect on August 6, while those affecting the oil and banking sectors will start from November 4.
"Currently, refiners are closely monitoring the Japan-US governmental talks, and the best [outcome] to would be to get an exemption", Tsukioka said, declining to elaborate on each refiner's response on Iranian oil imports.
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