India will “definitely” not cut off entirely its crude oil imports from Iran, but it expects to have more clarity on its oil purchasing strategy amid the U.S. sanctions on Tehran at a meeting with top U.S. officials next week, a senior Indian government official with direct knowledge of the country’s oil purchasing policy told Reuters on Wednesday.
“Definitely we are not going to zero,” the Indian official told Reuters, noting that the September 6 meeting between U.S. Secretary of State Mike Pompeo and Defense Secretary Jim Mattis with India’s Foreign Minister Sushma Swaraj and Defense Minister Nirmala Sitharaman will give more clarity on India’s oil purchases from Iran as this would be “the highest level of meeting we will have with the U.S.”
Analysts have been largely expecting India to scale back some of its Iranian oil imports, but not to go completely cold turkey. India—Iran’s second largest oil customer after China—has been torn between trying not to have its sovereign and its refiners cut off from the U.S. financial system, if it were to continue importing Iranian oil, and keeping cheaper Iranian oil imports flowing.
Iran, for its part, is trying to keep its key buyers in Asia, especially its biggest customers China and India, purchasing Iranian oil even after U.S. sanctions on Tehran oil exports snap back in early November.
Iran has reportedly started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have backed out of covering oil cargoes from Iran in the face of the returning U.S. sanctions on Tehran.
India’s imports from Iran were expected to start slowing down from this month and next as some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, prompting them to reduce oil purchases from Tehran.
Between August 1 and 16, total Iranian oil exports plunged by 600,000 bpd compared to July loadings, due to plummeting flows to India, Platts preliminary tanker tracking data showed. India saw crude flows from Iran plunge to 203,938 bpd in the period August 1-16, compared to 706,452 bpd in July, according to Platts trade flow data.