New Delhi: With reports about the US allowing eight countries—including India, Japan and South Korea—to buy Iranian oil after it re-imposes sanctions on the Persian Gulf nation, state-run Indian Oil Corporation (IOC) on Friday remained circumspect about the possible fallout.

India is a major importer of Iranian oil —of the 220.4 million metric tonnes of crude imported by India in 2017-18, more than 9% was from Iran.

Speaking to reporters, Sanjiv Singh, chairman at India’s largest oil refiner, said that he was hopeful to be able to import from Iran as loss of substantial volume of Iranian oil won’t be good for the international market as it will impact prices. He added that while IOC places order for crude oil a month in advance, the time for placing December contracts hasn’t come.Bloomberg reported that while the Trump administration’s goal remains to choke off revenue to Iran’s economy, waivers are being granted in exchange for continued import cuts so as not to drive up oil prices.

This comes in the backdrop of India adopting a “wait and watch" policy ahead of US oil and banking sanctions on Iran from Sunday. India has been eyeing these concessions and were hinted at by petroleum minister Dharmendra Pradhan on 8 October about India continuing its energy imports from Iran even in the wake of the US’ 4 November deadline. State-run refiners Indian Oil Corp. Ltd and Mangalore Refinery and Petrochemicals Ltd have contracted 1.25 million tonnes of Iranian oil for import in November.

“We need to see what channels are open," Singh said.

India, which meets 83% of its crude oil requirements through imports and has been reeling from high oil prices, is not new to doing business with a sanctions-hit Iran. Indian banks put in place a rupee payment mechanism during the earlier round of sanctions against Iran over its nuclear programme, that included strictures against Iran’s energy and banking sectors. IOC has made payments for Iranian oil contracted till August.

Bloomberg added that the identity of the countries getting waivers is expected to be released officially on Monday, with these waivers being only temporary.

India has also been trying to diversify its supply portfolio, with firms starting to source liquefied natural gas and oil from the US. The options before it include increasing imports from sources such as the US, Iraq, Saudi Arabia, Nigeria, Venezuela, and the UAE. However, their terms may not be as attractive as those offered by Iran as the energy major provides 60-days credit, insurance and shipping.

Singh added that while there are alternatives for sourcing adequate volumes, but prices may be affected in the wake of sanctions.

Moody’s Investors Service in a report on 27 September estimated an around $500 million decline in earnings for Indian state-owned refiners, IOC, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd, if they were to buy crude from sources other than Iran.

Any rally in global crude oil prices will affect India’s oil import bill and trade deficit. Every dollar increase in oil prices has the potential to push up the import bill by around 10,700 crore on an annual basis. While crude prices jumped 50% in dollar terms and 70% in rupee terms since last year, the prices have fallen from the four-year highs reached earlier this month.

Arun Kumar Sharma, director, finance, at IOC, said that oil suppliers, including Saudi Arabia and Iraq, have been informally communicated about considering rupee payments, as it will bring down the demand for dollars. However, no response has been received, Sharma added.

This comes in the backdrop of India seeking a review of payment terms with major oil producers with the pitch being made by Prime Minister Narendra Modi himself during his meeting with top executives of global oil companies and experts from the energy sector last month. Also, the slide in the rupee has made it Asia’s worst performing currency of the year.

India has also proposed a consumers’ collective comprising major energy buyers—China, India, Japan and South Korea. The move assumes importance given that China and India are the world’s second and third largest oil importers, respectively. Japan and South Korea are placed at the fourth and fifth positions, respectively.

In another development, IOC will bear a 2,200 crore impact on account of the NDA government last month effecting a 2.50 per litre cut in prices of petrol and diesel. Out of the 2.50 cut, the Centre reduced excise duty by 1.50 per litre, while state-run fuel retailers are to take a hit of 1 for every litre sold.

Singh added that there is no indication from the government at what level the 1 price cut can be withdrawn.

IOC posted a 12.2% fall in second-quarter profit on Friday due to forex expenses and raw material costs. It registered a net profit of 3,247 crore in the quarter ended 30 September compared with 3,696 crore in the corresponding period last year.