India reroute US-approved Iranian crude oil tanker to China

New Delhi: A US-sanctioned oil tanker carrying iranian crude oil The mid-route rerouting, abandoning India as a destination and rerouting to China, highlights the ongoing challenges in resuming oil trade with Iran.The Aframax tanker Ping Shun, which had signaled to Vadinar in Gujarat earlier this week, has now targeted Dongying, China, as its destination, according to ship tracking firm Kpler. The vessel is expected to deliver India’s first Iranian crude oil cargo since 2019.

Sumit Ritolia, principal research analyst at Kpler, said: “An Iranian crude oil tanker, the Pinh Thuong, which has been en route to Vadinar, India, for the past three days, has made India its announced destination and is now sending a signal to China.”The shift in destination appears to be related to payment-related concerns, with sellers tightening financial terms amid ongoing sanctions complexities.Ritolia said the trading environment has shifted away from earlier credit facilities and toward upfront or near-term payments, complicating transactions.“While such changes in the intermediate destination of Iranian crude are not unprecedented, they highlight the increasing sensitivity of trade flows to financial terms and counterparty risks,” he said.He added, “If payment issues are resolved, cargoes may still be shipped to Indian refineries. However, this incident highlights that commercial terms are as important as logistics when determining the flow of Iranian crude oil to countries other than China.”Since AIS tracking data may change during transportation, it is impossible to confirm that the ship’s current signal destination is the final destination.The Ping Shun, carrying an estimated cargo of around 600,000 barrels, was loaded from Kharg Island in early March and is expected to arrive at Vadinar on 4 April.If delivered, it would mark India’s first import of Iranian crude in nearly seven years. Imports were stopped in May 2019 after the United States tightened sanctions on Iran’s oil exports.India has previously been a major buyer of Iranian oil, with imports reaching about 518,000 barrels per day in 2018. In early 2019, during a temporary sanctions exemption period, imports fell to 268,000 barrels per day before stopping completely.At its peak, Iranian crude accounted for about 11.5% of India’s total oil imports, with refiners favoring Iran’s light and heavy crude due to compatibility and favorable terms.Although the United States recently granted a waiver allowing limited purchases of Iranian oil at sea for 30 days, financial and banking restrictions remain a major obstacle.Iran continues to be excluded from the SWIFT system, making international payments difficult. Earlier mechanisms, such as euro payments through intermediary banks, are no longer available.The temporary exemption, aimed at easing global oil prices amid ongoing conflict in the region, is set to expire on April 19. Analysts estimate that about 95 million barrels of Iranian oil remain stored on ships at sea, some of which may be available to buyers such as India.Vadinar was the originally designated destination, home to a large refinery run by Nayara Energia and backed by Russian oil giant Rosneft.

India’s oil ministry insists that any resumption of imports from Iran will depend on techno-commercial viability, signaling a cautious approach amid geopolitical and financial risks.The tanker’s diversion highlights how sanctions, payment mechanisms and risk perceptions continue to affect global oil trade flows, with China remaining a more stable buyer of Iranian crude under current conditions.(Inputs from PTI)