Petroleum Minister Dharmendra Pradhan on Monday said Indian companies will continue to buy Iranian oil in November despite the looming United States sanctions on that country.
"Refiners have placed November nominations to lift 1.25 million tons (about 9 million barrels) of oil from Iran", Reuters quoted a source as saying.
A vessel carrying 2 million barrels of Iranian oil discharged the crude into a bonded storage tank at the port of Dalian in northeast China on Monday, according to Refinitiv Eikon data and a shipping agent with knowledge of the matter.
USA sanctions against Tehran are widely expected to have an immediate impact on Iran's oil exports, although the estimates of exactly how much of the country's oil could disappear from November 4 vary widely.
"Likely, India and Iran will agree to use Rupee payments instead of U.S. dollar payments, something already tried between 2013 and 2015, with Iran then using Rupees to import food, medicines and other commodities from India", said Leszczynski.
USA sanctions targeting Iran's crude oil exports come into force from November 4, with Washington ratcheting up the pressure on governments and companies around the world to slash their Iranian oil imports to zero.
Oil prices rose on Tuesday on growing evidence of falling crude exports from Iran, OPEC's third-largest producer, before the imposition of new US sanctions and a partial shutdown in the Gulf of Mexico due to Hurricane Michael. "Iran's oil can not be replaced by Saudi Arabia", the minister added.
International Monetary Fund downgrades outlook for world economy to 3.7% growth
The fund left its 2018 US forecast unchanged but cut its expectation for next year, citing the impact of the trade conflict. The Nasdaq Composite dropped 7.44 points, or 0.10 per cent, to 7,728.51 at the opening bell.
The catalyst for crude prices for getting tighten was the worries about tighter supply conditions once Washington's sanctions against Iran's crude oil exports kick in beginning in November.
But, we have already seen that India, Japan and South Korea are already scaling back on purchases of Iran crude oil, which suggests that the number will be bigger than previously thought.
The softer stance on Iran plus news that Saudi Arabia and Russian Federation could ramp up oil production to compensate for the sanctions has lowered oil prices slightly. An industry source also said October shipments were so far below 1 million bpd. Global crude oil prices had reached a record high of $147 per barrel in July 2009.
Benchmark Brent crude was up 65 cents at $84.56 a barrel by 0850 GMT, having fallen as low as $82.66 on Monday.
Pradhan said a new world order was being established and added, "Is this not a recognition of India's leadership?" In September, Iran exported 1.6 million bpd.
The cost of the Indian basket of crude rose to $84.14 a barrel on 5 October, according to the Petroleum Planning and Analysis Cell.
In the run-up to 2019 general elections, Fitch Ratings recently raised the spectre of return of state control on fuel pricing in India.