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After oil imports from Iran surge, India must now contemplate big cuts

Reuters  |  NEW DELHI 

By Nidhi Verma

(Reuters) - India's imports from in 2018-19 could be higher than the previous year despite the imposition of U.S. sanctions, a analysis of industry data shows, forcing the government to rein in purchases in coming months.

India's imports from jumped by about 34 percent in April-October from a year earlier, totalling 603,000 bpd or 17.7 million tonnes, tanker arrival data showed.

The sharp increase was due to front-loading of purchases by Indian refiners ahead of renewed U.S. sanctions on Tehran, which came into effect on Monday.

By choking Iran's and shipping industries, aims to try to force to quash its nuclear ambitions and ballistic missile programme as well as its support for militant proxies in the

The granted exemptions to India, and six other countries, allowing them to temporarily continue buying Iranian oil, but those waiver carry conditions.

For India, Iran's No. 2 oil customer, the 180-day waiver allows refiners to buy only up to 1.25 million tonnes a month, or about 300,000 bpd. That means will have to slash its monthly purchases from by about half to comply with the waiver.

Analysts still expect that India's purchases of Iranian crude in the full fiscal year ending in March 2019 will exceed the 452,000 bpd, or 22.6 million tonnes, that it imported in the previous year, according to government data.

But there have been some signs of a drop-off in demand. In October, imported about 466,000 bpd of Iranian oil, according to preliminary tanker arrival data obtained from sources, a decline of 11.6 percent from September and marginally down from October last year.

Most refiners boosted purchases from Iran ahead of the U.S. sanctions as Iran was offering almost free shipping and extended credit periods, according to

Refiners also wanted to offset the impact of rising global and a weak Indian rupee.

"Indian refiners imported a lot from Iran in the first half of the fiscal year mainly due to the discount offered by Iran," said Sri Paravaikkarasu, of East of Suez Oil for consultants FGE in

She said could even ask refiners to cut imports below the waiver level to curry favour with

Last year India's imports fell as refiners had curtailed Iranian due to a dispute with over development rights to a

State-run Indian refiners that control about 60 percent of the country's capacity had contracted to buy 396,000 bpd of Iranian oil in the current fiscal year. But with new U.S. sanctions in place, they will now have to tell Iran that they cannot fulfil those agreements.

(Reporting by Nidhi Verma; Editing by and Susan Fenton)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, November 06 2018. 21:51 IST