India-bound Iranian crude tanker diverts to China amid payment hurdles

An Iran-linked oil shipment originally destined for India has changed course mid-voyage, highlighting persistent financial and sanctions-related barriers to reviving crude trade between New Delhi and Tehran.

The Aframax tanker Ping Shun, sanctioned by the United States in 2025, had been signalling Vadinar in Gujarat as its destination, Caliber.Az reports via Indian media.

However, ship-tracking data now indicates the vessel is heading towards Dongying in China, according to analytics firm Kpler.

“An Iranian crude vessel 'Ping Shun' that had been en route to Vadinar, India, over the past three days has dropped India as its declared destination near arrival and is now signalling China,” said Sumit Ritolia, Lead Research Analyst, Refining and Modelling at commodity market analytic firm Kpler.

While the destination listed on the vessel’s Automatic Identification System (AIS) may still change, analysts point to tightening financial conditions as a key factor behind the rerouting.

“The shift in destination of Ping Shun appears to be payment-related, with sellers tightening terms, moving away from the earlier 30-60 day credit window toward upfront or near-term settlement,” Ritolia added.

The tanker is estimated to be carrying approximately 600,000 barrels of crude oil loaded from Iran’s Kharg Island in early March. Its expected arrival in Vadinar on April 4 would have marked India’s first intake of Iranian crude in nearly seven years.

The development comes as Indian refiners assess limited opportunities to purchase Iranian oil following a temporary 30-day waiver issued by Washington last month, permitting transactions involving cargoes already at sea. That waiver is set to expire on April 19.

However, payment mechanisms remain a major obstacle. Iran has been largely excluded from the SWIFT international banking system since 2012, with further restrictions imposed after renewed US sanctions in 2018. Previous arrangements—such as euro-denominated payments routed through Turkish banks—are no longer viable.

Vadinar hosts a major refinery operated by Nayara Energy, backed by Russia’s Rosneft, and had been expected to receive the shipment.

India was once a significant importer of Iranian crude, particularly Iran Light and Iran Heavy grades, due to their compatibility with domestic refineries and favourable pricing structures. Imports ceased in May 2019 following the tightening of US sanctions.

At its peak in 2018, Iranian oil accounted for roughly 11.5% of India’s total imports, with volumes reaching around 518,000 barrels per day. This declined sharply to 268,000 barrels per day in early 2019 before falling to zero.

Industry estimates suggest that around 95 million barrels of Iranian crude are currently stored on vessels at sea, with approximately 51 million barrels potentially available to Indian buyers, depending on logistical and financial conditions.

By Aghakazim Guliyev