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As Houthi insurgents intensify their attacks on marine traffic in the Red Sea and Gulf of Aden regions off the coast of Yemen, India is considering resuming shipments of crude oil from Iran, according to people with knowledge of the matter.
External Affairs Minister S. Jaishankar visited Iran last week, and the matter was brought up at recent bilateral meetings between the two nations.
Shipments from Iran pass across the Gulf of Oman and the Persian Gulf, where the Houthis are not very common. They added that since the Houthis also support the Iranian government, it is unlikely that they will obstruct commerce that Tehran views as vital.
India has so far not bought crude from any country under global sanctions. The government opened up on importing Venezuelan oil only after the US removed sanctions on the South American nation.
Iran is willing
“The Iranian side has been keen on resuming oil exports to India. It is badly trying to expand the small set of buyers for its oil. Also, after the impact of the pandemic, the economy is struggling,” a diplomatic source said.
In the absence of buyers, an increasing share of Iranian crude has been diverted towards China, feeding nearly 10% of China’s crude requirements. The exports have, however, hit a hurdle, as Tehran is now lowering its discounts to $5-6 per barrel below Brent crude prices, down from $10 prices per barrel offered earlier to China, Iranian media reported earlier this month.
While Indian refiners are yet to negotiate spot purchases from the country, Iranian crude is increasingly being offered by traders under the garb of Malaysian oil, Business Standard has earlier reported.
Reasons to Import
With the wars in Ukraine and Gaza already keeping tensions elevated and the oil trade volatile, the latest Houthi threat has come as a major headache for the government. The group has so far attacked at least three India-linked ships and nearly a dozen ships with Indian crew. Officials from the Ministry of Petroleum and Natural Gas said that crude freight charges have doubled in the past month.
After more than a year of securing major shipments of Russian crude, India is increasingly looking to re-establish supplies from its traditional partners in West Asia. According to Vortexa, as of December, Iraq and Saudi Arabia were India's second and third-largest sources of crude oil.
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