NEW DELHI: India’s state-run refiners are holding back from purchasing US-permitted Iranian oil cargoes despite a fresh sanctions waiver, as logistical, financial and regulatory uncertainties outweigh the short-term opportunity.According to a Bloomberg report, the hesitation comes after the United States issued a one-month waiver on Friday, allowing countries to buy Iranian crude already “on the water”, in a bid to ease global oil prices. However, state-owned refiners are sceptical of this purchase. Unresolved issues around shipping, insurance and payment mechanisms have collectively prevented any deals from materialising.At the core of the reluctance is the waiver’s tight timeline.In oil trade terms, a 30-day window is widely viewed as insufficient to negotiate contracts, complete due diligence, arrange financing, secure insurance, and execute delivery. Refiners fear that any delay could push shipments beyond the waiver period, exposing them to sanctions risk.Compounding this is a logistics bottleneck. Marine insurance—critical for cargoes worth millions of dollars—remains a grey area.Most global insurers operate within Western regulatory frameworks and may be unwilling to underwrite shipments tied to Iran, given the risk that the waiver could lapse mid-voyage. Without indemnity cover, tankers may also face rejection at ports, adding another layer of uncertainty.Financial channels present an equally significant hurdle. Iran’s limited access to the global banking system, particularly the SWIFT network, has left refiners unclear about viable payment mechanisms. Questions remain over which currency to use, which intermediary banks are compliant, and whether transactions could trigger future scrutiny. This has slowed due diligence—the verification process required before entering such trades—especially after a five-year gap in dealings.“Issues like shipping and insurance are unclear, and refiners are uncertain about payment mechanisms, currency, insurance and even whether Iran-linked vessels would ultimately be accepted at Indian ports,” Bloomberg reported citing sources familiar with the matter.The lack of a formal government framework from New Delhi has further reinforced caution. Refining executives have indicated that official guidance or a policy shield would make such purchases more viable. In its absence, companies are left to independently assess legal and operational risks, encouraging a risk-averse approach.This caution mirrors sentiment in other major Asian markets. China’s state-owned Sinopec has also indicated it would avoid Iranian shipments, citing the narrow delivery window under the waiver.India’s stance contrasts sharply with its earlier response to Russian oil waivers. There, established trade routes, payment systems and shipping arrangements allowed refiners to move quickly. With Iran, those commercial “plumbing” systems have largely been dormant since 2019, when US sanctions halted imports.Historically, Iran was a significant supplier to India, accounting for as much as 11.5% of total crude imports at its peak, according to Kpler data. However, years of disengagement have eroded operational readiness, making a rapid re-entry into the trade difficult.While Iranian sellers and intermediaries have approached Indian refiners with offers of crude and liquefied petroleum gas—an important cooking fuel currently in short supply—there has been little progress even on pricing or delivery timelines.The broader takeaway is that while the US waiver provides a theoretical opening, the practical barriers—legal ambiguity, logistical constraints and financial friction—are proving decisive. For Indian refiners, the risk of getting entangled in sanctions complications currently outweighs the benefit of discounted barrels.Unless the waiver is extended or backed by clearer government-to-government arrangements, industry participants expect India to remain on the sidelines, allowing this brief window for Iranian oil to pass largely unused.
