Saudi Arabia may soak up some of Iran’s previous market share on the Indian market as Saudi Aramco is set to ship additional 2 million barrels per month to Indian Oil Corp between July and December this year on top of the existing term supply deal between the two companies.
“We have told them we will be taking 2 million barrels every month for six months from July (about 1.6 million tons in total) and they have agreed,” A K Sharma, Indian Oil’s director (finance), told Reuters this week.
India, Iran’s second largest oil customer after China, was one of the eight countries that were granted six-month waivers to continue buying oil from Iran after the U.S. re-imposed sanctions on the Iranian oil industry in November. The United States, however, pursued a maximum pressure campaign against Iran last month and put an end to all sanction waivers for all Iranian oil buyers.
This put Indian refiners in a position to source the market for alternatives, and many of them, especially private companies, did, because they are wary of possible secondary U.S. sanctions if they continue to buy oil from Iran.
Indian Oil Corp has a term deal with Saudi Aramco to buy a total of 5.6 million tonnes in the financial year 2019/2020, plus an option to buy another 2 million tonnes, according to Reuters.