India's imports of Iranian crude plunged by three quarters in July from June, tanker arrival data obtained by Reuters showed, as the country's only active importer in the past two months curbed buying.
The cut in Essar Oil's Iran volumes were likely due to New Delhi's delay in extending approvals for Iranian insurers covering shipments into India, a trade source said.
Indian imports of Iranian crude are expected to rise from August, however, with refiner Mangalore Refinery and Petrochemicals Ltd resuming shipments after a gap of four months because of a separate insurance issue.
MRPL's return as a buyer could give some relieve to Iran, which has seen its exports more than halved by sanctions imposed in 2012 by the United States and the European Union, costing Tehran billions of dollars a month in lost oil revenue.
India on July 17 granted a three-month approval to Iranian shipping underwriters Kish P&I Club and Moallem Insurance Co with effect from June 28, the date of lapse.
Essar Oil has declined to comment on whether the issue over the shipping insurers resulted in its lower imports for July or if the resolution means its imports would rebound in August.
Essar Oil imported 35,500 barrels per day (bpd) of oil from Iran in July, compared with 140,800 bpd in June, tanker arrival data made available to Reuters shows.
The cuts dropped India's Iranian oil imports 82 percent from 201,900 bpd in the same month a year ago, when state-backed refiners were also taking shipments.
Iran dropped in July to 15th place on the list of India's crude suppliers for the month, down from eighth place in June and fourth for all of 2012.
The U.S. and EU sanctions placed on Iran over its nuclear programme have reduced its oil exports more than half from pre-sanction levels of about 2.2 million bpd.
In the first half of 2013, imports of Iranian oil from its four biggest buyers - China, India, Japan and South Korea - fell more than a fifth from a year ago to around 960,000 bpd.
MRPL, which used to be Iran's top Indian client, and Hindustan Petroleum Corp Ltd halted Iranian oil imports in April due to difficulties in getting insurance for refineries processing Iranian oil. That forced New Delhi to look at providing its own reinsurance after European firms backed out over sanctions.
MRPL has already started taking Iran oil again, while HPCL has said it wants more adequate coverage for refineries running the sanctions-hit crude.
The Indian government also wants to boost imports from Tehran to prop up the rupee, which fell past 65 to the dollar to a record low on Thursday.
The U.S. and European Union sanctions have pushed Tehran into accepting payment in rupees for some of its oil, and higher volumes could support the currency.
"Within the UN sanctions and fully complying with the sanctions, there may be more space for imports from Iran," Finance Minister P. Chidambaram said earlier this month.
Overall in the first seven months of this year India's imports from Iran have declined 46 percent from the same period last year to about 185,700 bpd, the trade data showed.
India imported nearly 58 percent more oil from Latin America in the January to July period as its Iranian shipments dropped.
Overall, Asia's third-largest economy shipped in 14.1 percent more oil in July than a year ago, while imports for the January-July period rose about 10.3 percent, the data showed.
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