India's state-owned refiners, while eager to access alternative crude supplies, are exercising caution in committing to large Iranian crude purchases despite the Trump administration's temporary sanctions relief, according to sources familiar with procurement discussions.
The hesitation reflects three persistent obstacles: payment mechanisms that remain fraught with banking sanctions risks, shipping arrangements complicated by insurer concerns, and reputational risks from sanctions violations that might trigger renewed penalties.
Infrastructure of Sanctions Persists
Even with the 30-day window, the underlying sanctions infrastructure remains in place. US banks are prohibited from facilitating Iranian transactions; insurance providers (predominantly European) are reluctant to cover Iranian crude shipments; and shipping agents face legal complexity in arranging logistics.
Reliance Industries, despite its aggressive move to commit 5 million barrels directly from NIOC, is likely navigating these hurdles through alternative mechanisms: non-dollar settlement currencies (potentially Chinese yuan or Indian rupees), specialty insurers willing to bear sanctions risk, and routing through intermediaries in non-aligned nations.
TankerMap monitoring shows that Iranian crude movements remain minimal despite sanctions relief, suggesting that structural barriers—beyond legal frameworks—are constraining trade. The 30-day window will likely remain underutilized unless the US extends relief or India structures transactions through durable workarounds.