India May Stop Iran Oil Imports as Insurers Back Out

India May Stop Iran Oil Imports as Insurers Back Out

Indian refiners may be forced to halt imports of Iranian crude oil after insurance firms said refineries processing oil from Iran will no longer be covered, a report said Saturday.

Western sanctions aimed at halting Iran’s alleged nuclear weapons programme have been seeking to cripple Iranian finances by drying up buyers for its crude and last year banned insurance cover to ships carrying Iranian oil.

Mangalore Refinery and Petrochemicals Ltd (MRLP), India’s second biggest buyer of Iranian oil after private sector Essar Oil, said it may have to halt crude imports from Iran in the absence of insurance cover.

Local media reported Indian refiners were seeking instructions from the Indian government on buying Iranian crude.

PTI quoted unnamed officials at public and private Indian refiners using Iranian oil who said insurers feared blacklisting by the United States and Europe and have indicated cover for refineries will not be available.

The US State Department has welcomed reports that Indian refineries may have to cut import of crude oil from Iran, PTI said.

Iran is a major oil supplier to energy-hungry India and it was not immediately clear how New Delhi might replace the Iranian crude.

Annual trade between India and Iran totals $15 billion, but is heavily skewed towards Tehran, which exports mainly oil.

India has been walking a diplomatic tightrope as it pursues good ties with Tehran, while deepening relations with the United States.

Under the sanctions, Iranian crude customers such as India have been restricted to using their own currencies for the purchases.

Importers are being compelled to keep the payments in escrow accounts that Iran can use only for locally sourced goods and services, in what amount to barter arrangements.