India plans to keep the option open of resuming crude purchase from Tehran and will closely monitor the steps taken by the Biden administration on the Iran nuclear issue.

Petroleum minister Dharmendra Pradhan had earlier said that the country hopes to resume crude oil imports from Iran after Biden takes charge as US President.

Analysts, however, said the country should adopt a cautious approach on the issue as the Biden administration has a lot of hurdles to overcome before returning to the table on this matter.

The slump in global crude prices and the alternative crude sources the country has found because of the US sanctions on Iran should help India in taking this cautious approach, they added.

The Trump administration had walked out of the Joint Comprehensive Plan of Action (JCPOA) in May 2018, three years after it was signed by the Barack Obama administration alongside the UK, France, China, Russia and Germany. Iran said last year it would stop abiding by the deal, which seeks to restrict the country’s nuclear activities.

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It purchased 7.65 million tonnes of Venezuelan crude from January to October last year compared with 15.9 million tonnes in 2019.

S&P Global Platts in a report said the year 2020 was the first year when Iranian crude inflows into India dropped to zero and that gave Iraq an opportunity to grab a market share of as high as 25 per cent, with shipments of about 50.17 million tonnes in 2020, up from 45.88 million tonnes in 2019, shipping data showed.

"Competitive pricing was an important factor to make Iraq the top supplier of crude to India. But Iraq's share in 2021 could go lower as there is a likelihood of some crude coming back from Iran due to the potential easing of US sanctions from the new Biden administration," said Lim Jit Yang, adviser for oil markets at S&P Global Platts Analytics.

The report said Iranian crude supply could grow by 500,000 barrels per day between June and December, assuming a new agreement is forged by late 2021 and that the Biden administration is not as stringent about policing sanctions enforcement than the Trump administration. In a best-case scenario, growth of up to one million b/d is possible by December, it added.