India increases imports of Iranian oil in Jan. 2012

Feb 09, 2012 12:00 AM

India increased its imports of Iran's oil to become its largest customer in January, partly offsetting a cut in Chinese purchases, as sanctions failed to significantly dent Tehran's sales, according to people in the oil industry.
Iranian crude exports to India rose to 550,000 bpd in January, up 37.5 % from December. That coincided with a 50 % cut in exports to China, the result of a pricing dispute. China now imports around 250,000 bpd from Iran.

Some analysts question, however, whether India can keep Iranian oil imports at such levels.
"I don't think India is insulated at all" from sanctions, said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group. "So the question is just how long Tehran is willing to sell on credit and how long Tehran can go without hard currency."

Iran has been more flexible than other suppliers to India when it comes to payments, and accepted a delay on billions of dollars of arrears after sanctions disrupted payments last year.
Many Indian refineries are geared toward Iranian oil, making it more straightforward and cheaper to refine. There is no sign India is getting Iranian oil at a discount.

Despite a pledge to find alternatives, South Africa has also increased its Iranian oil imports to 100,000 bpd, a person familiar with the situation said.
Overall Iranian crude exports remained steady in January, preliminary data show. Iranian crude shipments to the European Union eased slightly, as refiners prepare for an embargo on Iran. Iranian officials say the embargo won't affect the country because they can find other buyers.

That comes despite rising financial pressure on Iran and on other nations to stop buying its oil. The US has sanctioned Iran's central bank and is working to cut the country off from the network of international financial transfers, the conduit for oil revenue, and pressured Asian and African nations to reduce their Iranian oil imports alongside the EU embargo.
But sanctions haven't yet deterred India. Iran's ambassador to India, Sayed Mehdi Nabizadeh, said that India had agreed to pay for some purchases of Iranian oil in Indian rupees, a route that would avoid the risk of an interruption in banking transfers.

Final figures for shipments to Europe -- which include the EU and Turkey-fell by 7 % in January to 650,000 bpd, according to a person in the oil industry familiar with the matter.
Earlier, preliminary numbers pointed to a steady 700,000 bpd last month. But direct deliveries -- outside the SuMed pipeline -- to Greece fell by 25,000 bpd to 85,000 bpd, the person said.

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