Indian Refiners Negotiate Iranian Oil Resumption as US LPG Imports Reach 1M Ton Record

Indian oil refiners have initiated technical and commercial discussions with the National Iranian Oil Company (NIOC) to explore the resumption of crude oil imports. This development follows a new memorandum of understanding between the US and Iran, which includes a temporary 60-day sanctions waiver allowing for the production and sale of Iranian petroleum products through August 21, 2026. The NIOC has actively reached out to international trading houses and Indian refiners to re-establish commercial ties that were largely severed in 2019 following the reimposition of US sanctions.

While exploring Iranian options, India is simultaneously deepening its energy ties with the West to mitigate risks associated with Middle Eastern supply chains. India’s imports of liquefied petroleum gas (LPG) from the United States are projected to surpass 1 million metric tonnes in June 2026, marking a historic high. This surge in American imports serves as a critical buffer against potential disruptions in the Strait of Hormuz, where Phillips 66 executives warn that shipping uncertainties and supply bottlenecks may linger, threatening the stability of global energy flows.

Despite the US waiver, Indian refiners remain cautious, focusing on the techno-commercial feasibility of Iranian barrels. Key concerns include the duration of the sanctions relief, the availability of insurance for tankers, and the establishment of robust payment mechanisms. While the US Treasury has indicated that dollar-denominated funds may be permitted for these purchases, the lack of clarity regarding financial sector sanctions continues to keep some buyers on the sidelines. India’s decision will hinge on whether the pricing structure of Iranian crude remains competitive enough to offset the logistical risks and reputational concerns associated with trading during active regional conflicts.