Top oil exporter Saudi Arabia is selling more crude to India in July as two refiners have asked for additional cargoes, industry and company sources familiar with the plan said, in part to make up for a loss of supplies from Iran.
Hindustan Petroleum Corp (HPCL.NS) and Mangalore Refinery and Petrochemicals Ltd (MRPL.NS) stopped buying Iranian crude from April because local insurers said they cannot cover refineries that process oil from Iran as global reinsurers, mostly based in the West, may not honour claims.
U.S. and European sanctions aimed at pressuring Tehran over its suspected pursuit of nuclear weapons have already more than halved Iran's shipments, costing it billions of dollars in revenue since the start of 2012. Washington is now seeking to cut shipments further through tighter sanctions.
India's purchases from Iran could average about 190,000 barrels per day (bpd) spread over April and May, based on industry and preliminary tanker arrival data. That is about a quarter less than the 250,600 bpd imported on average in the first three months of the year.
The company and industry sources did not want to be named due to the sensitivity of the matter.
For July, HPCL will take 84,000 bpd from Saudi Arabia, more than double the 40,000 bpd it normally buys under annual contracts, the sources said.
MRPL will take in 86,000 bpd in July versus its commitment to lift 55,000 bpd, a company source said.
HPCL's imports from Saudi Arabia will also rise in July as the company did not buy full volumes it is committed to take from the kingdom for June because a crude processing unit at its Vizag refinery was shut following a fire. The unit may restart by the end of this month.
Other Indian buyers of crude from Saudi Arabia - which include Indian Oil Corp (IOC.NS) and Reliance Industries (RELI.NS) - will lift the same volumes committed under annual contracts, sources said. India's total imports from Saudi Arabia average a little over 700,000 bpd.
Two refineries in South Korea will also take in full contracted volumes, two separate sources said.