Published: Tue, October 09, 2018
Business | By Eloise Houston

India buying Iran oil in defiance of Trump sanctions

India buying Iran oil in defiance of Trump sanctions

Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, taking a major hit from United States sanctions and throwing a challenge to other OPEC oil producers as they seek to cover the shortfall.

Pradhan said two state refineries have made nominations to purchase Iranian oil in November.

Oil dropped below $83 a barrel on Monday, pressured by expectations that some Iranian oil exports will keep flowing after the USA reimposes sanctions, easing a strain on supplies.

However, a USA government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil.

"One way or another, it looks as though India is going to take some Iranian crude", said Olivier Jakob of Petromatrix, adding that the development was helping oil to "retrace some of the price surge we saw last week".

The US withdrew from a deal on Iran's nuclear program in May and will individually impose sanctions on Iran's crude oil consumers on November 4.

Benchmark Brent crude was up 55 cents at $84.46 a barrel by 0730 GMT, having fallen as low as $82.66 on Monday.

Alongside potential waivers on Iranian sanctions, oil supply is seemingly back on the rise with Libya recently boosting oil production to 1.25mbpd (200kbpd more than the September average).

Speaking at an event here, Pradhan said two of India's state-owned companies had contracted for Iranian crude for November. And Saudi Arabia and OPEC and non-OPEC countries, they've produced 1.5 million barrels a day.

The inaction by OPEC and Russian Federation at the end of September-and the growing evidence from tanker tracking data that Iran's oil exports have started to fall quicker than most market participants had been expecting-has emboldened bulls, and some analysts started to predict that the possibility of $100 oil as soon as year's end is not to be ruled out. An industry source who also tracks exports said October shipments were so far below 1 million bpd.

"Iran's oil can not be replaced by Saudi Arabia nor any other country", Zanganeh said, according to his ministry's website.

JP Morgan had expected demand growth to moderate this year, but so far demand has been "relatively robust", Scott Darling, regional head of oil and gas research at JP Morgan Chase, told Bloomberg on Monday. It added that the effective reversal of fuel price deregulation would also constrain future private sector investments in the sector.

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