India's oil imports from Iran fell nearly 5 percent in August from July, tanker discharge data made available to Reuters showed on Thursday, in a third straight monthly drop that supports the country's case for renewal of a waiver from U.S. sanctions.
Imports rose by about a fifth from a year ago, however, when Iran cut supplies to its second-biggest market as Indian firms had still not found a stable way to pay for oil after New Delhi ended a clearing mechanism under U.S. pressure in December 2010.
The United States and Europe have imposed tough sanctions on Iran to choke off Tehran's oil revenues and halt a disputed nuclear programme the West thinks is aimed at building atomic weapons -- a claim Iran has repeatedly denied.
One of Tehran's biggest Indian clients, MRPL, has not been able to import all its contracted v olumes since July, when European sanctions banning shipping and insurance cover for Iranian vessels took effect.
Washington this year issued 180-day waivers to all of Iran's major crude buyers from sanctions targeted at financial institutions after they cut imports significantly.
This month it renewed waivers for Japan and 10 EU nations, while those for China and India will be reviewed in the next few months.
China, Iran's biggest oil client, raised imports from Tehran in August to 463,000 barrels per day (bpd) from 454,000 bpd in July although its purchases from the sanctions-hit nation declined by nearly a fifth from a year ago.
India shipped in about 192,000 bpd of oil from Tehran last month versus about 202,000 bpd in July and about 161,000 bpd in August 2011, when only MRPL had managed to ship in Iranian oil, the data showed.
Iran had already slipped to third place among India's oil suppliers in 2011/12, replaced by Iraq and ceding a position it had held for five years, as the sanctions bit into its exports.
India, the world's fourth-largest oil importer, is diversifying its crude slate and gradually reducing dependence on Iran.
Overall, Asia's third-largest economy shipped in nearly 4 percent more oil in August than a year ago, at 3.38 million bpd, while imports in the January-August period rose 8.5 percent to 3.5 million bpd as the country expanded its refining capacity.
Oil shipments from Iran in the January-August period fell nearly 1 percent to 324,000 bpd as refiners significantly raised imports in the January-March quarter to meet commitments under annual deals that ended March 31, 2012.
To replace Iranian volumes, India imported about 55 percent more oil from Latin America in the January-August period, with the region accounting for about 14 percent of overall imports, up from 10 percent a year ago.
The Middle East region continued to supply about two-thirds of India's oil imports in January to August.
Edited by: S. Isayev