Iran is offering free delivery of crude oil to India, industry sources said, signalling that tough Western sanctions which have slashed its exports in half are driving Tehran to increasingly desperate measures to keep oil flowing.
The US has yet to ease the pressure on Asian buyers to continue reducing purchases from the OPEC member, even though Iran and world powers began two days of talks on Thursday hoping to reach a “first step” towards ending the standoff over Tehran’s disputed nuclear programme.
The drop in exports is costing Iran billions of dollars in lost revenue every month. Tehran is also unable to repatriate most of the money earned from oil it does manage to sell, as the sanctions have cut off bank transfer facilities, crippling its economy by choking off its biggest revenue stream.
Despite the near halt of petrodollar payments, Iran is resorting to measures such as offering deep discounts on oil and now free delivery to India, according to sources who requested anonymity because of the sensitivity of the issue.
Iran’s remaining Indian clients — Mangalore Refinery And Petrochemicals Ltd, Essar Oil Ltd and Indian Oil Corp (IOC) — could save freight of 70 cents to $1 a barrel on purchases from Iran, said one of the sources. Tehran is also offering Indian buyers a discount on price if refiners raise purchases, the sources said.
“The more you buy, the more incentives you get. If a refiner buys 30 million barrels of Iranian oil in a year then the discount translates to 25 cents per barrel,” this source added.
Iran already offers 90 days’ credit on crude sales to Indian refiners while most other producers stick to 30 days’ credit.