Amidst the increasing tension in the Middle East and high prices of crude oil in the international market, news of great relief has come to the fore for India. After a gap of about seven years, the first consignment of crude oil from Iran is going to reach India. This consignment will reach Vadinar Port in Gujarat on 4th April.
According to ship tracking data, an Aframax tanker named “Ping Shun” is headed towards India from Kharg Island carrying about 6 lakh barrels or about 95 million liters of crude oil. The tanker left in early March and will reach the Indian coast after a journey of about a month.
This is the first time since May 2019 that India is importing crude oil from Iran. At that time, due to the stringent sanctions imposed by America, many countries including India had to stop buying Iranian oil. Recently, America has given a temporary exemption of 30 days, due to which it has become possible to purchase oil already present in the sea.
Crude oil prices in the international market remain above $100 per barrel, hence Iranian oil is being considered among the cheapest options. According to experts, this consignment is coming at a time when Indian refineries have limited stocks and cost pressure is increasing.
The question is also arising regarding this consignment that who will buy it. Nayara Energy’s big refinery is located in Vadinar, but it is likely to go into maintenance. In such a situation, the possibility of purchase by government companies like Indian Oil Corporation or Bharat Petroleum is being expressed.
New beginning of India-Iran energy relations
Before 2019, India was Iran’s major oil importer and at one time Iran’s share in the country’s total imports reached 11.5%. Iranian oil is considered technically suitable for Indian refineries and also has flexible trading terms. However, payment arrangements still remain a major challenge, as Iran is outside the international SWIFT system, which hinders transactions.
In recent months, India has also increased oil imports from countries like Russia and Venezuela. It is clear from this that India is working on a strategy to strengthen its energy security by procuring cheap oil from various sources.
Experts believe that this consignment reaching Vadinar is not just a delivery, but a signal of a possible new beginning of energy cooperation between India and Iran. If conditions remain favourable, import of Iranian oil may start again on a large scale in the coming times.
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