Wary of US sanctions, Iran offers oil to India at rates cheapest in 14 years

Reports suggest India imported a record 700,000 barrels from Iran each day.

Reuters Photo

New Delhi: In a bid to deter its biggest oil customers ahead of US sanctions scheduled to make comeback later this year, Iran has offered oil to India and China at rates which are the lowest in 14 years.

IRNA, the country's state-run news agency, quoted sources in the Iranian oil ministry as saying that while the official figures cannot be revealed, the rates offered to buyers in Asia are at their lowest level in 14 years.

India and China account for over half of the oil that Iran exports globally. And while China has said it won't cut back on how much oil it procures from Iran, the country has also said it won't increase figures. India, meanwhile, is treading a cautious path. Reuters reported that the country imported larger volumes oil from Iran in July - a month which also saw Saudi Arabia pip Iraq as India's largest oil supplier. "Iranian crude OSPs for July have moved in tandem with other middle east producers but incentives offered by Iran has made its oil more attractive compared to other alternatives," Sushant Gupta, Research Director, Asia Pacific Refining, at consultancy Wood Mackenzie, was quoted as saying.

Other reports have suggested that despite numerous incentives to buy from Iran, India is looking at other options which include increasing volumes from Venezuela and Nigeria.

Iranian oil, however, is loaded with incentives especially because the US has begun implementing sanctions against the country and would target the petroleum sector from November. "Trade with us or trade with Iran," US President Donald Trump has warned countries.

India is hoping to earn some leeway from Washington but industry experts are not too hopeful of New Delhi getting one. In such a situation, many feel that imports from Tehran could drop down to a trickle in the time to come.