US sanctions on Iran eased, Asian countries prepare to buy oil
Due to the United States temporarily lifting sanctions on Iran, India and other Asian countries are once again planning to purchase Iranian oil. Traders disclosed this information today, Saturday, after Washington took this step to “address the global energy crisis” created by the impact of the Iran–Israel war.
Sources from three Indian refineries (oil processing plants) have stated that they are ready to buy Iranian oil and are awaiting a clear message from Washington regarding government directives and issues such as payment mechanisms.
Compared to other major Asian importers, India has lower oil reserves, so the country is seeking to take advantage of this opportunity. However, no immediate comment has been received from the Indian government on this matter.
Refineries in other parts of Asia are also examining the legal and technical aspects of purchasing Iranian oil, according to concerned individuals.
U.S. Treasury Secretary Scott Bessent stated yesterday, Friday, that the Trump administration has relaxed sanctions on the purchase of Iranian oil at sea for 30 days.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) said that Iranian oil loaded onto ships on or before March 20 will be eligible for this facility if it is unloaded by April 19. Since the start of the Iran–Israel war, this is the third time the United States has granted such relief.
Millions of barrels of oil are becoming available
According to data from energy market analysis firm Kpler, there are currently about 170 million (17 crore) barrels of Iranian oil stored on ships across different parts of the sea.
On the other hand, consultancy firm Energy Aspects estimated on March 19 that the amount of this oil was around 130–140 million barrels. Asian countries depend on the Middle East for about 60 percent of their total oil demand. However, refinery operations in the region have been forced to reduce production this month as shipping through the Strait of Hormuz has nearly come to a halt.
After the Trump administration reimposed sanctions in 2018 over Iran’s nuclear program, China became the country’s main customer.
According to Kpler, Chinese refineries purchased an average of 1.38 million barrels of Iranian oil per day last year. Although most countries halted Iranian oil imports due to sanctions, China continued to buy it at significant discounts.
Some complications in purchasing
While the chance to buy the oil exists, traders believe that some complexities are involved with the method of payment, as well as the fact that a large part of the oil is stored in old, unregistered vessels.
Also, those who have previously entered into contracts with the National Iranian Oil Company (NIOC) to buy the oil directly face some complexities. However, a large part of the Iranian oil has been sold through third parties since 2018.
A Singapore-based trader said, “Banking and administrative processes take some time, but everyone will try to start operations quickly.”
Before the reimposition of sanctions in 2018, India, South Korea, Japan, Italy, Greece, Taiwan, and Turkey were the main importers of Iranian oil.
This is because there is a deep connection between geopolitics and the security of the energy sector. Although the temporary relaxation of sanctions is expected to stabilize the global oil market and bring some relief to the energy-dependent countries such as India, it is a reflection of the short-term and fragile nature of international policy decisions. It is in this context that the entire scenario is a reflection of the fact that there is a need for the countries of the world to look for more stable sources of energy and not rely on geopolitically sensitive areas.