India may get first Iran crude since 2019 after tanker signals Gujarat port as its destination, Pg3

Key Highlights:

• An oil tanker, Ping Shun, flagged in Eswatini, is signaling Gujarat's Vadinar port as its destination, potentially marking the first Iranian crude delivery to India since May 2019.
• The US issued a waiver on March 21, suspending sanctions on Iranian crude for a month to increase global oil supply and curb rising prices, similar to a previous waiver for Russian oil.
• The tanker is expected to carry around 600,000 barrels of Iranian crude loaded at Iran's Kharg Island around March 4 and is expected to arrive at Vadinar on April 4.
• Indian refiners will decide on buying Iranian crude based on techno-commercial feasibility, according to the Petroleum Ministry.

Detailed Insights:

• The US Department of the Treasury authorized transactions related to Iranian crude oil loaded before March 20 until April 19, but payment mechanisms for new buyers like India remain unclear due to Iran's exclusion from SWIFT.
• Previously, a Euro-based payment system existed, but it ceased functioning after most major buyers stopped importing Iranian crude following the reimposition of sanctions by the Trump administration.
• While over 90% of Iranian oil exports have been going to China, the US move aims to enable other countries to buy Iranian oil, even though Iran claimed to have no surplus available.
• The US decision could allow Indian refiners to capitalize on the opportunity, similar to their increased imports of Russian crude, as every barrel counts amid tight global supply.
• India relies on imports to meet over 88% of its crude oil needs, with 2.5-2.7 million bpd of India’s crude imports transiting the Strait of Hormuz.

Key Concepts Involved:

• Sanctions Waiver: A temporary lifting of economic penalties to allow specific activities, like oil trade, for a limited period.
• SWIFT: A global messaging network facilitating international payments; exclusion hinders a country's financial transactions.
• Techno-commercial feasibility: An assessment of a project's viability based on technical aspects and commercial profitability.