India is set to import at least 400,000 barrels per day (bpd) of Iranian oil in the year from April 1, with refiners looking to ramp up purchases after the sanctions targeting Tehran ended in January, industry sources familiar with the matter said. 
Average annual imports at that level in the fiscal year just begun would be the highest in at least seven years, and would carry forward a bump in purchases that lifted March shipments to a five-year high for a month at 506,100 bpd. 
Iran was India’s second biggest oil supplier - a position now belonging to Iraq - before economic sanctions aimed at Iran’s nuclear programme hampered its trade relations, forcing the South Asian nation to tap alternative suppliers. 
The plans for higher annual imports by India are a sign that Tehran is beginning to regain market share after the lifting of sanctions. Iran has said it will continue increasing its oil output and exports until it reaches the market position it held in the pre-sanctions era. 
India’s state refiners – Indian Oil Corp, Mangalore Refinery and Petrochemicals, Bharat Petroleum and Hindustan Petroleum – told Iran in February that together they are willing to buy about 240,000 bpd in the year begun in April, the industry sources said. 
Among private refiners Essar Oil is willing to lift about 120,000 bpd, they said, and HMEL has indicated it will buy a small quantity with an option to raise volumes. 
The Indian oil companies and the National Iranian Oil Co (NIOC) – which handles Tehran’s oil sales - did not respond to requests for comment. 
IOC aims to buy 80,000 bpd from Iran with an option for another 40,000 bpd, MRPL will buy about 90,000-100,000 bpd, while HPCL and BPCL plan to buy about 20,000 bpd each, the sources said. 
In addition to these volumes and the barrels Essar is looking to buy, private refiner Reliance Industries is seeking to buy 100,000-120,000 bpd Iranian oil, mainly heavy grades, Reuters reported in February. 
It is not clear, however, how much of the heavy grades Reliance will be able to purchase as many of the barrels have already been committed. Last month, Reliance made spot imports of Iranian oil, its first such purchase since 2010. 
The Indian refiners are expected to finalise their annual contract deals with Iran soon, the sources said. 
The Indian buyers are being drawn in part by freight discounts that increase as more barrels are purchased, although the concession is much less than the free shipping that Iran was offering under pressure from sanctions, the sources said.  Purchases from Tehran could still be impacted by the availability of insurance cover for installations processing Iranian oil and the resumption of banking channels to facilitate payments and opening of letter of credits (LCs). 
Last month ship insurers stepped in to help plug a shortfall in cover for transporting Iranian oil as US reinsurers are still restrained by Washington’s sanctions. 
However, there is still no clarity on whether reinsurers will facilitate cover for refineries processing Iranian oil, the sources said.  Iran last month gave a list of about a dozen banks, mainly European, that have accounts with Turkey’s Halkbank to clear a part of about $6bn dues pending with Indian firms.