Centre banking on European Union to find ways to buy Iran oil

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TOKYO - Japanese oil refiners have temporarily halted Iranian oil loadings ahead of USA sanctions and are buying alternatives as it remains unclear whether Japan will receive an exemption, the head of the country's refinery association said on Thursday. The other is the concern that tanker tracking data may become less reliable, as Iran may try to use some "unconventional" methods of keeping its oil sales on track, like switching off tracking devices on tankers-a "solution" that Tehran is said to have used in the previous round of sanctions in 2012-2015.

India will settle payments for Iranian oil using rupees through local banks starting in November as US sanctions will make it hard to settle trades through European banks, two industry sources said on Thursday.

"Iranian oil exports are coming down pretty hard", said Roger Diwan, a veteran oil analyst at consultant IHS Markit Ltd.

India wants to keep importing oil from Iran, because Tehran offers some discounts and incentives for Indian buyers at a time when the Indian government is struggling with higher oil prices and weakening local currency that additionally weighs on its oil import bill.

Tens of millions of India's citizens are Shiite Muslims.

The Trump administration had withdrawn from a nuclear accord signed by Barack Obama in the month of May and had ordered first round of sanctions on Iran from August 6.

"India has long sought to develop Iran's Chabahar port, which would give India direct access to Afghanistan and Central Asia without relying on transit routes through Pakistan", the report said.

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"It is quite complicated. reinsurers are quite apprehensive about extending cover for Chennai Petroleum", said one of the sources, who asked not to be identified because of the sensitivity of the issue.

While initial estimates earlier this year suggested that Iran could lose around 500,000 bpd of oil exports, in recent weeks analysts have started to warn that losses could be higher than 1 million bpd.

The CRS report said that during a visit to India in June 2018, US Ambassador to the UN Nikki Haley said the Trump administration might consider providing exemptions to US sanctions to enable the Chabahar work to continue because the project is vital to Afghanistan's development and reducing its dependence on Pakistan.

They said the European Union has been telling India that it was in the process of coming out with a payment mechanism as using U.S. dollars for oil transaction will be restricted post-November 4 when the United States sanctions come into force.

Chennai Petroleum, a subsidiary of the country's biggest refiner Indian Oil Corp (IOC), has a deal to buy up to 2 million tonnes, or 40,000 bpd, of oil from Iran in the fiscal year 2018/19.

This has forced the refiner to cancel a scheduled loading of 1 million barrels in October, they said. SBI has told refiners it would stop handling Iran payments from November.

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