Indian companies DEFY President Trump by purchasing Iranian Oil despite U.S. sanctions

Indian companies DEFY President Trump by purchasing Iranian Oil despite U.S. sanctions

A US government official confirmed late Monday the administration is engaged in a process to selectively grant waivers to certain countries still importing Iranian oil.

The sanctions could cut off 1 million barrels a day of Iran's crude oil.

"India is continuing with its relationship with both its key energy partners Iran and the U.S.", a second source said.

This is the first time Pradhan has spoken about India's stand on buying Iranian oil once the U.S. sanctions on Iran come into force from 4 November. However, according to Alice G. Wells, principal deputy assistant secretary of state for South and Central Asia, the U.S. has not taken any decision on sanctioning India for importing oil from Iran and investing in the Chabahar port.

Iran is India's third-largest oil supplier behind Iraq and Saudi Arabia.

With Iran sanctions still on the table, potential spare capacity constraints and also a slowdown in US drilling, USA bank J.P.Morgan said in its latest cross-asset outlook for clients that it recommended to "stay long Jan '19 WTI on supply risks to crude".

India is Iran's second-largest single oil customer after China and was expected to cut back on Iranian oil purchases following U.S. sanctions.

The International Monetary Fund (IMF) estimates that Iran's economy fell into a recession this year that will get worse next year as a result of renewed US sanctions on Tehran. The global benchmark hit a four-year high of $86.74 last week but slipped as low as $82.66 on Monday.

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"It is still early to say how India will settle its trade with Iran", the first source said, adding that India could consider paying Iran for crude with the rupee currency.

Refiners have already announced purchases of oil from Iran for November at levels nearly similar to those in October, despite the start of the sanctions on the 4 November.

Brent crude LCOc1 futures were down 2 cents at $84.98 a barrel by 0049 GMT, after a 1.3 percent gain on Tuesday.

Iran's economy is now forecast to contract this year and especially in 2019, by 3.6 percent, "on account of reduced oil production, before returning to modest positive growth in 2020-23", according to the International Monetary Fund.

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.

Pradhan said he had urged Saudi Arabia's oil minister to keep in mind the interests of oil consuming countries when it came to higher prices. Additionally, the state-owned oil marketing companies have been mandated to reduce prices of petrol and diesel by Re 1 a litre. "The basic point is that they are all government companies", Pradhan said, according to The Hindu.

In the run-up to 2019 general elections, Fitch Ratings recently raised the spectre of return of state control on fuel pricing in India.

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