Even as the 60-day reprieve from US sanctions for Iran is expected to unlock more barrels of crude oil for the market, the exercise has limited potential for Indian refiners considering the legal and commercial challenges.

The US on Monday lifted sanctions on Iran for 60 days, allowing for production, delivery and sale of crude oil, petrochemicals and petroleum products till August 21. It follows a 14-point memorandum of understanding (MoU) signed between the two countries last week.

Sources said there are issues with respect to payments, which need more clarity.

“The biggest issue is that it is temporary. I pay the US for Iranian oil. Then where does that money go? That’s one. Another is that refiners and insurers will have more due diligence at hand, considering Iran’s commercial links with China and Russia. Besides, Iran also faces sanctions from the UK and the EU,” pointed out one of the sources.

As per the general licence (sanctions reprieve) for Iran by the US Office of Foreign Assets Control (OFAC), any payment of funds owed to Iran, the Government of Iran, or any blocked person for the purchase of crude oil, petrochemical products, or petroleum products of Iranian origin authorised by paragraph (a) may be made in US dollar-denominated funds.

At this stage, Kpler remains “sceptical” about whether any other country, barring China, will materially increase purchases from the Persian Gulf nation.

Given the uncertainty around the Strait of Hormuz (SoH) and geopolitical risks, most Asian refiners have already been proactive in securing crude supplies. Refinery planning cycles typically run 2–3 months ahead, meaning many refiners have already lined up imports through at least the first half of August 2026, added the global real time data and analytics provider.

For instance, Indian refiners are currently focused on the second half of August and September 2026 requirements, said Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modelling.

“Russian and Middle Eastern grades remain the core of their procurement strategy, while Venezuelan crude continues to gain market share. Meanwhile, Russian crude availability remains healthy as refinery runs are constrained by ongoing downstream disruptions. Opportunistic purchases are possible if discounts become highly attractive, but the overall scope appears limited,” he told businessline.

The March 2026 sanctions waiver had generated very limited (India) participation from non-Chinese buyers. Most potential buyers stayed on the sidelines because of payment restrictions and other issues.

Ritolia emphasised that even if discussions between buyers and sellers become more constructive, refiners are unlikely to commit significant volumes while the US sanctions policy remains subject to rapid changes. The key issue is not just access to Iranian crude today, but confidence that the trade can continue tomorrow.

“Refiners considering Iranian crude will focus on three key factors: the durability of sanctions relief, pricing and discounts, and the availability of payment, insurance, shipping, and logistics mechanisms. Of these, payment remains the biggest hurdle,” he added.

Meanwhile ratings agency ICRA expects the announcement of SoH opening and temporary 60-day sanctions reprieve is positive for the tight crude oil markets.

“Iranian crude was historically available with credit period of 60-90 days, as against 30 days of other crude producers, which was beneficial for refiners due to lower working capital requirements, besides which geographical proximity to India would benefit Indian refiners,” said Prashant Vashisht, Senior VP and Co-Group Head, Corporate Sector Ratings at ICRA.

However, Ritolia said the waiver may have reopened the doors for Iranian exports, but that does not automatically create a broad pool of buyers. For now, China remains the most likely beneficiary.

Published on June 24, 2026