Trade sources indicated that Jaya is likely headed to a port on India’s east coast; Paradip could be its destination, they said. (Photo: marinetraffic website)
An oil tanker carrying Iranian crude is signalling India as its destination and is expected to discharge the oil for public sector refiner Indian Oil Corporation (IOC) later this week, trade sources and ship tracking data indicated. Jaya, a Curacao-flagged very large crude carrier (VLCC) carrying Iranian oil, moved from the Strait of Malacca into the Andaman sea close to the Andaman and Nicobar Islands over the weekend, ship tracking data shows. It has now crossed the Indian islands and is sailing in the Bay of Bengal, it is learnt.
Trade sources indicated that the vessel is likely headed to a port on India’s east coast; Paradip could be its destination, they said. Malaysian waters around the Strait of Malacca have been a known holding area for crude oil tankers carrying Iranian oil. For nearly seven years now, India has not imported Iranian oil, and this could be the first delivery.
IOC did not immediately respond to a request for comment on the tanker Jaya. Although it is worth noting that destinations indicated by ships can change, as it happened with another tanker carrying Iranian oil last week. Eswatini-flagged tanker Ping Shun with around 600,000 barrels of Iranian oil, which was approaching the Vadinar port in Gujarat, late Thursday changed its declared destination to Dongying in China’s Shandong province. Trade sources had indicated that payment-related issues could have been the reason behind the diversion. The government on Saturday, however, denied that payment issues were the reason for diversion, while also announcing that a tanker carrying Iranian liquefied petroleum gas (LPG) was discharging cargo at the New Mangalore port.
Moreover, the government confirmed that India is buying Iranian crude and there were no payment-related hurdles in buying Tehran’s oil, following the sanctions waiver for Iranian oil on water announced by the US last month. “India imports crude oil from 40+ countries, with companies having full flexibility to source oil from different sources & geographies based on commercial considerations. Amid Middle East supply disruptions, Indian refiners have secured their crude oil requirements, including from Iran; and there is no payment hurdle for Iranian crude imports, contrary to the rumours being circulated,” the Petroleum Ministry said in a post on social media platform X on Saturday.
On Ping Shun’s diversion, the ministry said that in international oil trade, bills of lading often carry indicative discharge port destinations and on-sea cargoes can change destinations “mid-voyage based on trade optimisation and operational flexibility”. According to shipping sector insiders, this indicates that the diversion could possibly have happened due to the cargo fetching a higher price elsewhere, China in this case. With global oil supplies hit due to the disruption in energy flows via the critical maritime chokepoint of the strait of Hormuz, countries are scrambling to secure energy supplies, and such diversions are not uncommon.
Amid the West Asia war, the US on March 21 suspended for a month the sanctions on Iranian crude already loaded on tankers in a bid to allow as many barrels of oil as possible to flow into the international market to improve the global oil supply situation and curb spiralling crude oil prices. The waiver from Washington was similar to the one issued for Russian oil earlier in March. India hasn’t imported Iranian crude since May 2019 due to reimposition of US sanctions on Tehran by the first Trump administration. Given that a temporary ceasefire has been announced by the US and Iran, it remains to be seen whether these waivers will be extended beyond their respective expiries this month.
According to the general licence issued by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury on March 21, transactions related to the sale, delivery, or offloading of crude oil and petroleum products of Iranian origin – loaded on any vessel, including tankers sanctioned by the US, as of 12.01 eastern daylight time (9.31 am India time) on March 20 – are authorised until April 19. Data indicates that Iranian crude was loaded on Ping Shun around March 4 at Iran’s main oil facility of Kharg Island, which means that the crude on this tanker was not under US sanctions.
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Vessel movements through the Strait of Hormuz were effectively halted due to the conflict that began on February 28; Iranian oil shipments have continued unabated though. The Strait accounted for one-fifth of global oil and liquefied natural gas (LNG) flows. Around 2.5–2.7 million bpd of India’s crude imports—around half of the overall oil imports—have transited the Strait in recent months, while the longer-term average is around 40%. India depends on imports to meet over 88% of its requirement of crude oil.
