India to consider Iranian crude oil imports based on techno-commercial feasibility

New Delhi: India is evaluating a possible resumption of Iranian crude oil imports, with the final call to be determined by techno-commercial considerations, a senior government official said on Monday. Speaking at an inter-ministerial media briefing on West Asia, Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, indicated that any decision would depend strictly on commercial viability and operational feasibility.

"It is based on techno-commercial feasibility," she said.

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India had previously been among the largest importers of Iranian crude, favouring its light and heavy grades due to compatibility with domestic refineries and competitive pricing. However, supplies were halted from May 2019 after tighter sanctions on Iran in 2018 forced refiners to shift to alternative sources, including producers in the Middle East and the United States. At its peak, Iran accounted for 11.5 percent of India’s crude import basket.

Temporary US waiver creates opportunity, payment clarity lacking

The reassessment comes after the United States granted a 30-day waiver allowing purchases of Iranian oil currently stored at sea, in a bid to ease price pressures triggered by the US-Israeli war on Iran. Roughly 140 million barrels of Iranian crude are estimated to be floating in offshore storage or transit. While the waiver permits transactions, the mechanism for payments remains uncertain.

Iran continues to be excluded from SWIFT (Society for Worldwide Interbank Financial Telecommunication), the global financial messaging system used for cross-border banking transactions. Industry sources noted that earlier trades were settled in euros through a Turkish intermediary bank, a channel that is no longer available.

Iran’s exclusion from SWIFT dates back to March 2012, when European Union sanctions over its nuclear programme led to the disconnection of several Iranian banks, sharply limiting its ability to conduct international financial transactions. The situation worsened in 2018 after the United States reinstated sanctions, further restricting Iran’s access to global trade flows, oil revenues and foreign exchange reserves.

Market dynamics may favour India’s return

According to Sumit Ritolia, analyst at Kpler, India could re-emerge as a significant buyer of Iranian crude alongside China and other Asian economies. "Currently, Iranian crude availability remains elevated, with an estimated 170 million barrels on water, including floating storage and cargoes in transit. While part of these volumes are committed, a portion remains unsold," he said. "Indian refiners retain the ability to re-integrate these barrels with minimal operational adjustments, supported by prior processing experience and established trading setups."

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He added that any revival in imports would be shaped more by geopolitical and commercial factors than by technical constraints.

"Key considerations include the scope and durability of sanctions relief (including on shipping), pricing structure, and the availability of payment, insurance and logistics mechanisms. If these conditions align, a ramp-up in Indian imports of Iranian crude could be significant, similar to the rapid increase observed in Russian crude intake following the easing of Western sanctions," he said.

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