India to Pay Iran $1.4 Billion in Oil Dues

India's first payment to Iran could come as early as this month.

Signs that Iran is ready to ramp up oil exports were witnessed last week, following reports that India is ready to pay the Islamic Republic $1.4 billion in oil dues.

The move follows the P5+1 (US, UK, France, China, and Russia plus Germany) last month reaching agreement to lift sanctions against Iran.

According to unnamed sources, Indian Finance Secretary Rajiv Mehrishi has asked refiners to prepare to pay Tehran two instalments of $700 million, with a first instalment to come as soon as this month.

As the sanctions have not yet been formally lifted, the exact timing of the payments is said be dependant on the finance ministry receiving U.S. Department of Treasury approval.

The office of India's finance secretary and the U.S. Treasury have reportedly declined to comment on the matter.

However a U.S. statement was quoted as saying that "the U.S. government has committed to render non-sanctionable the release in installments of certain Iranian restricted funds held overseas in an amount consistent with installments provided under previous [Joint Plan of Action] JPOA relief periods."

Iran's oil activities over the coming months have been the source of much speculation and could have a heavy impact on the bunker markets. 

Last month, when the sanctions deal was announced, analysts made renewed predictions that crude could fall to $30 per bbl, with such a development likely to push IFO380 bunker prices in the primary ports under $160 per metric tonne.

In June Iran told members of the Organization of Petroleum Exporting Countries (OPEC) to "make room" for an estimated additional 1 million barrels a day of supply that it intends to produce within six months of sanctions being removed.