Indian refiners and at least one European refiner are reviewing their crude oil purchases to make space for Iranian oil in the second half of this year, anticipating that US sanctions will be lifted, company officials and trading sources said. At least one European refiner has held on discussions with Iran’s state oil firm NIOC on restarting purchases and Indian refiners say they are planning to reduce spot purchases to clear the way for Iranian contract barrels.

India has stopped imports from Tehran in 2019 after a temporary waiver granted to some countries expired. US President Joe Biden’s administration and Iran having indirect communication to revive the agreement for Tehran to restrict its nuclear activities in exchange for a lifting of sanctions. Iran does not disclose its oil export data, but analysis based on tanker tracking says exports fell from a peak of 2.8 million bpd to as low as 200,000 bpd in 2018. Analysts expect Iran to build up crude exports to 1.5 million bpd in the fourth quarter when sanctions are lifted.

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Several Indian state refiners, whose refineries are suited to the crude, have committed to buy Iranian oil once sanctions are lifted. They have raised the share of spot purchases to take advantage of cheaper barrels in a surplus market and replaced lost Iranian shipment with US oil. State-run Bharat Petroleum Corp, which plans to tap the spot market for 45% of its overall imports, will buy Iranian oil if sanctions are lifted, a company spokesman said. High sulphur distillate-rich Iranian crude suits BPCL’s Kochi refinery and costs $2-$2.5 per barrel less than similar grades, he said.