Indian refiners imported around 10 million barrels of Iranian oil in October, and its November shipments are expected to be lower. The Trump administration is considering waivers on sanctions, a us government official said on Friday.
US Secretary of State Mike Pompeo said last month that the White House would only consider waivers for Iran's oil buyers if they vowed to eventually bring their imports to zero.
According to an executive order (EO 13846) issued by President Donald Trump, all American and non-American entities were given a six-month "wind-down" period from May 2018, in which to "zero out" all transactions with designated Iranian oil companies and port operators. The sanctions could cut off 1 million barrels a day of Iran's crude oil.
Sources said Iran is open to accepting rupee payment for oil and may use the money to pay for equipment and food items it buys from India.
Iran has questioned whether the market needs more oil and says its output is holding steady at about 3.8 million bpd.
New Delhi and Tehran have reportedly discussed reverting to rupee trade after November 4.
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In the United States, almost 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael. "We do not know if we will get a waiver (from U.S. sanctions) or not".
Trump administration officials told the Free Beacon in June they are "not granting waivers" to some countries importing Iranian oil, but walked that statement back late Monday when a US official disclosed it is now actively working to grant "individual countries" waivers from the new oil sanctions. "State's been pushing very hard on this, they deserve a lot of credit for their efforts, so let's see what they come up with before criticizing".
There are concerns a shortfall in Iran's oil production could prompt global oil supply to fall and prices to rise.
In the previous round of USA sanctions on Iran from 2012 to 2015, India continued to purchase Iran's oil although it was forced to dramatically reduce its purchases to protect its wider exposure to the us financial system.
However, the Trump administration this weekend announced it is considering waivers on sanctions for countries that are merely reducing their imports of Iranian oil.
The best value zone for the November WTI crude oil market is $72.35 to $71.27.