Indian companies to buy Iranian oil in November: Minister

New Delhi, Oct 16 (IANS) State-run oil marketing companies (OMCs) have placed orders for importing crude oil from Iran next month when US sanctions on Tehran are due to take effect, Petroleum Minister Dharmendra Pradhan said on Tuesday.

Reiterating India's stand, Pradhan told reporters here on the sidelines of the 3rd India Energy Forum that the current surge in global crude oil prices was more a result of the market sentiments being hit by geo-political factors which includes Iran and said there were no issues of availability.

Indian Oil Corp and Mangalore Refinery and Petrochemicals Ltd together have placed orders for 1.25 million tonnes (MT) of crude oil from Iran, the Minister announced earlier this month.

Following US President Donald Trump withdrawal from the US-Iran nuclear deal, sanctions were reimposed on the Persian Gulf nation which will take effect from November 4.

According to OMC officials, the rupee option in paying for Iranian oil is under discussion and the Iranians have been accepting Indian currency as payment.

Iran became India's second biggest oil supplier during the first quarter (April-June) of the current fiscal, with OMCs opting for the heftier discounts offered by the Iranians, who thus replaced Saudi Arabia in this position, according to official data.

India imported 5.67 MT oil from Iran during the quarter.

Analysts attribute the change last year to the output cuts initiated by Saudi Arabia and the increased availability of heavy grades of crude from Iraq at a higher discount, which are more suited for use in Indian refinery complexes.

Briefing reporters here after the first India-US 2+2 dialogue last month, US Secretary of State Mike Pompeo had said that the sanctions were not intended to adversely impact countries like India but were intended to hurt the sanctioned country.

He said he had told the Indians "consistently that on November 4 the sanctions will be enforced and that we will consider waivers where appropriate".

Following a meeting here on Monday with Prime Minister Narendra Modi and chief executives of major global and Indian oil and gas companies, Saudi Petroleum Minister Khalid Al Falih said that Saudi Arabia expects its oil production to rise next month from 10.7 million barrels per day so as to counteract the shortfall resulting from the US sanctions against Iran.