The South Asian country may soon cut off its imports of Iran oil as coverage is shaky.
India is preparing to stop its imports of Iran crude, as the latest insurance news has shown that the refineries that process the oil would not be able to obtain coverage due to the sanctions from the West.
This, according to the head of the MRPL refiner, as options for coverage appear to be running out.
India is the second biggest buyer of Iranian crude, making this considerable insurance news. Nearly one quarter of Iran’s oil is taken by Indian refineries, which is estimated at a value of about $1 billion per month. However, without coverage, the refineries will not be able to continue to process the crude from the Middle Eastern nation.
Indian refiners have been making their insurance news announcements since Friday, and are scrambling for alternatives.
According to the Mangalore Refinery and Petrochemicals Ltd. Managing director, P.P. Upadhya, made an insurance news statement over the phone, saying “If cover is not available then all Indian refiners will have to halt imports from Iran or else they will have to take a huge risk.” That company is the largest purchaser of Iran crude in India.
Mr. Upadhya went on to say that “Insurance companies said if I buy Iranian crude my refinery’s insurance cover will be cancelled … If we don’t get insurance for the refinery then we will stop buying Iranian crude.”
Last year, both the United States and the European Union set strict sanctions into place, making insurance news headlines. The purpose of these sanctions was to place pressure on the oil trade from Iran in order to force the country to begin serious negotiations regarding its nuclear program.
The latest insurance news has shown that Indian insurers are now being affected by these sanctions because the reinsurers are located in the United States and Europe, and are withdrawing their coverage of the processing of Iranian crude so that the sanctions will not be breached. For that reason, the Indian insurers are halting their coverage of oil sourced from Iran, as well.