India Resumes Iranian Oil Imports After 7 Years, No Payment Issues

Indian refiners have purchased Iranian oil amid the Middle ​East conflict that has disrupted supplies through ‌the Strait of Hormuz, the Ministry of Petroleum and Natural Gas confirmed through a post on social media platform X on April 4.

The oil ministry further stated that Indian refiners have secured sufficient crude volumes and acknowledged that financial transactions for Iranian oil is proceeding without any payment problems.

Why India Turned to Iran

The world's third-biggest oil importer and consumer, India has not ​received a cargo from Tehran since May ​2019, following US pressure not to buy Iranian ⁠crude, but supply disruptions from the US-Israel war have ​hit the South Asian nation hard, reported Reuters.

"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 oil ministry said on ​X.

Last month, the United States temporarily removed sanctions on Iranian oil ‌and ⁠refined products to ease supply shortages.

India has secured its full requirements of crude oil for the coming months, the ministry added.

"India imports crude oil from  ​40-plus countries, ​with companies ⁠having full flexibility to source oil from different sources and geographies based on ​commercial considerations."

India has also bought 44,000 metric ​tons ⁠of Iranian liquefied petroleum gas loaded on a sanctioned vessel. The ministry said the vessel, which berthed at ⁠the ​western port of Mangalore on ​April 1, is discharging the fuel.

Meanwhile Business Standard reported that reports claiming Iranian crude cargo from Vadinar was diverted to China due to “payment issues” are factually incorrect. The government also said that claims of vessel diversion don't take into account how the global oil trade works. Bills of Lading often list ports of discharge, and the destination of the cargo can change during the trip to make operations more efficient and trade more profitable.

High Import Dependence

According to the Ministry of Petroleum and Natural Gas, India gets almost 85% of its crude oil from other countries. This makes it very vulnerable to changes in the global supply chain. The Organisation of the Petroleum Exporting Countries (OPEC) says that West Asia is still a major supplier, which increases risks during geopolitical disruptions.

India's plan to diversify its sources of crude oil and keep its procurement flexible will be very important for keeping domestic markets stable as geopolitical tensions continue to disrupt traditional supply routes. The International Energy Agency says that this kind of diversification is important for economies that rely on imports to become more resilient to long-lasting global energy shocks.