Asian economies are expected to exercise caution in buying oil from Iran following a 60-day sanctions waiver for the Gulf country’s oil exports that took effect from Sunday, as they weigh compliance, financial risk and a potential return of hostilities between Washington and Tehran.

Global markets have been looking for signs of progress that the United States and Iran could reach a lasting peace agreement despite concerns over the sustainability of a 60-day ceasefire that began earlier this month and Tehran’s nuclear programme.

The prospect of oil supplies from Iran, one of the largest producers in the Middle East, has raised hopes of cheaper energy for Asian economies. The US reimposed sanctions against Tehran in 2018, a move that has deterred most Asian buyers, except China, from buying Iranian oil.

“I think most Asian countries will buy some oil from Iran. Now that Iran has been officially allowed [to do so], it will look to sell aggressively,” said Gnanasekar Thiagarajan, owner of Commtrendz Research, noting that some amount of Iranian oil was previously sold through grey market channels.

Despite the temporary waiver, refiners in countries such as India, Japan and South Korea have already secured supplies from elsewhere and view the two-month waiver as too short to meet complex legal and compliance requirements, according to analysts.

Before the US sanctions were imposed, India was one of the largest buyers of Iranian oil.