Daily Management Review

Discounts On Freight For Oil Exported To India To Be Increased By Iran: Media


02/18/2018




Discounts On Freight For Oil Exported To India To Be Increased By Iran: Media
In an effort to enhance its market share in the global oil market and challenge the likes of Saudi Arabia and Iraq, OPEC member Iran has offered to increase the discount on freight for oil sale to India against a pledge from New Delhi of increased imports.
 
Iran is hoping that the appeal of its crude would be boosted by the concessions that it is offering to its clients – primarily those in Asia, and hell the country become more appealing to oil importers compared to other Middle Eastern suppliers. However, there is a looming threat that there could be more sanctions on it y the U.S.
 
Iran has been offering India a discount in freight related to a formula which results in 105 percent of the Platts assessment since international sanctions against the country were lifted in 2016.
 
According to sources in the media, the discount has been reduced by Iran from 80 per cent to 60 percent for 2017/18 but it is willing to enhance the discount in exchange of promises that Indian refineries would increase purchases.
  
“Now they are offering 100 percent discount, meaning a sum equivalent to 105 percent of the Platts freight assessment,” said one of the sources.
 
Increase of orders from India is expected by it, said Iran.
 
“State-owned Indian companies are going to increase their level of Iranian oil purchase,” Iran’s oil minister Bijan Zanganeh told reporters after a meeting with Indian oil minister Dharmendra Pradhan in New Delhi.
 
Approximately 500,000 bpd of Iranian oil in 2018/19 would be bought by both private and state owned Indian refiners, said Zanganeh, in India. He is visiting the country as a part of a delegation led by Iranian President Hassan Rouhani.
 
About 17 per cent less of oil from Iran was imported by India durin the first 10 months of the current fiscal – from April to January. The imports were curtailed primarily by the state refiners of India that make up about two-third of the about 5 million barrels per day (bpd) demand for oil in India in protest against Iran granting others the development rights of the huge Farzad B gas field.
 
“We have got good incentives compared to other major producers. We will get benefit if we buy from Iran ... We will boost oil imports from Iran compared to this fiscal year,” Pradhan told reporters, without elaborating.
 
In India, the third largest oil consuming country ion the world, its market share is being gradually increased by Iran – which was the second largest oil exporter to the country before international sanctions were imposed on it.
 
Iran emerged as the largest exporter to India in 2017 on a yearly basis and pushed ahead of Saudi Arabia.
 
Sources said that India will find that the prices of a barrel would be reduce by $1 due to the discounts offered by Iran.
 
 “I am very optimistic about the future of the relationship between the two countries and our companies, especially for developing oil and gas fields,” Zanganeh said.
 
(Source:www.reuters.com)






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