Indian refiners are exploring a return to purchasing Iranian crude oil following a temporary easing of sanctions by the United States, as the ongoing conflict in the Middle East continues to disrupt global energy markets. The move comes amid an acute supply crunch triggered by geopolitical tensions, prompting refiners across Asia to reassess sourcing strategies in order to secure affordable and stable oil supplies.

According to industry sources, Indian refiners are preparing to resume imports of Iranian oil but are awaiting formal guidance from the government as well as clarity from Washington on operational aspects such as payment mechanisms and compliance requirements. The renewed interest follows a 30-day sanctions waiver issued by the administration of Donald Trump, aimed at allowing the purchase of Iranian oil that is already in transit at sea.

The waiver, announced by US Treasury Secretary Scott Bessent, applies to shipments loaded on or before March 20 and discharged by April 19. It marks the third such temporary relaxation since the escalation of the conflict, with the objective of easing pressure on global oil markets. Analysts estimate that millions of barrels of Iranian crude are currently stored on tankers across key shipping routes, providing a short-term buffer to supply shortages.

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Data from market intelligence firms indicate that between 130 million and 170 million barrels of Iranian oil are currently at sea, spread across regions from the Middle East to East Asia. This floating supply is seen as a critical resource at a time when Asia depends on the Middle East for nearly 60% of its crude imports. The near-closure of the Strait of Hormuz has further strained supply chains, forcing refiners in the region to reduce processing rates and scale back fuel exports.

India, which maintains relatively smaller crude stockpiles compared to other major Asian importers, had earlier increased purchases of discounted Russian oil following previous sanctions adjustments. However, the potential re-entry of Iranian crude into its import mix could diversify sourcing options and help manage rising costs. Before sanctions were re-imposed in 2018, India was among the largest buyers of Iranian oil, alongside countries such as South Korea, Japan, and Turkey.

Despite the opportunity, several challenges remain. Industry participants have pointed to uncertainties around payment channels, banking compliance, and the use of older “shadow fleet” tankers that currently carry much of Iran’s oil. Additionally, contractual obligations and the shift towards third-party traders in Iranian oil sales since 2018 add further complexity. While refiners are keen to act quickly, experts note that regulatory, financial, and logistical hurdles may delay the resumption of large-scale imports.

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