IOC says will buy Iranian crude oil if sanctions are lifted

India will resume buying crude oil from Iran once the US sanctions are eased, an Indian Oil Corporation (IOC) executive on Thursday said, adding Iranian crude was beneficial for Indian refineries.

India stopped importing oil from Iran in mid-2019 following sanctions on the Persian Gulf nation by the Trump administration.

US President Joe Biden's administration and Iran have been involved in talks to revive the nuclear deal in exchange for the lifting of sanctions.

"I do not have any doubt why we will not be buying Iranian crude if sanctions are lifted," IOC Director (Finance) S K Gupta said on a conference call with investors to discuss earnings.

Indian refiners have begun preparatory work and can swiftly enter into contracts once the sanctions are lifted.

"Iranian crude is favourable to Indian refineries," he said, alluding to the crude quality being suited for processing at refineries traditionally built considering oil from the Middle East as a staple diet.

Iranian oil coming into the market will not just cool prices but also help India diversify its import basket.

In 2020-21, Iraq was India's biggest oil supplier, followed by Saudi Arabia and the UAE. Nigeria was the fourth-largest supplier and the US was the fifth.

India -- once Iran's second-biggest customer -- imports more than 85 per cent of its oil needs. Iranian crude will bring several benefits, including a longer credit cycle and shorter voyage savings on freight costs.

"What kind of commercial terms are offered is premature to comment as of now," Gupta said, responding to a question if Iranian terms will continue to be favourable.

Previously, Iranian oil was a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of substitute crudes -- Saudi Arabia, Kuwait, Iraq, Nigeria and the US.

Not just IOC, other state-owned firms, whose refineries are suited to the crude, have committed to buy Iranian oil once sanctions are lifted, industry sources said.

Bharat Petroleum Corporation Ltd (BPCL) will buy from Tehran if sanctions are lifted as the high sulphur distillate-rich Iranian crude suits its Kochi refinery and costs USD 2-25 per barrel less than similar grades.

Hindustan Petroleum Corporation Ltd (HPCL) too will look to buy Iranian oil if the prices were right, they said.

Iranian exports tumbled after former US President Donald Trump tightened sanctions in 2018 and ended waivers for some countries in 2019, including India.

Iran and world powers last month began their most serious attempt yet to resurrect a nuclear deal.

Iran re-started a banned nuclear programme after Trump pulled out of the deal and re-imposed sanctions on Iran. Even though new the US President wants to rejoin, both sides say the other must make the first move.

India was the second-biggest buyer of Iranian oil after China before sanctions halted supplies in May 2019.

Iran in 2017-18 was its third-largest supplier after Iraq and Saudi Arabia and met about 10 per cent of total needs.

Till 2010-11, Iran was India's second-biggest supplier of crude oil after Saudi Arabia, but Western sanctions over its suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 million tonnes and 10.95 million tonnes, respectively from it.

Sourcing from Iran increased to 12.7 million tonnes in 2015-16, giving it the sixth spot. In the following year, the Iranian supplies jumped to 27.2 million tonnes to catapult it to the third spot.