India is unable to secure insurance cover for about 5 million tonnes of crude oil reserves kept in caverns for any exigency, which also include supplies from sanctions-hit Iran. Global reinsurers are unwilling to provide cover fearing adverse action against them for the breach of US sanctions, two persons with direct knowledge of the matter said requesting anonymity.
“We are in a quandary, what to do? One option is to ask refiners to use the crude as it is too risky to keep the high-valued and highly volatile commodity without insurance cover. But, why would refiners bear additional costs for evacuation of crude from the underground caverns and transport it to their refineries?” one of the persons cited above said.
Indian refiners are reluctant to immediately use the crude oil due to various reasons, including inventory and cost issues, the second official said. Read more
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