India is weighing a number of options to secure additional crude oil to compensate for the loss of cheap Iranian supplies due to US sanctions.

Oil producers, however, are expected to seek a premium for the additional supplies which will roil the market further amid geo-political tensions.

Industry sources said the state owned refiners had tied up alternative supplies for the current month and are lining up supplies for the next two months.

“There would be no supply disruptions because of the US move… prices would be higher,” they added.

The projected drop in supply from Iran is expected to further heat up the market amidst the US sanctions on Venezuela and Opec producers and Russia reducing production on their own.

Defiant Tehran has sent out signals that it will pump oil despite the US sanctions and its tankers will attempt sales on the high seas at discounted prices.

Since the waiver in November, only state-owned firms have been buying oil from Iran and depositing the sum in Uco Bank under the rupee trade agreed with Tehran.

The last official consignment of crude, which was loaded last month, will arrive in the next few days.

Bharat Petroleum Corp (BPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have tapped Iraq to make up for the loss in Iranian oil.

Indian Oil has signed its first annual contract with US suppliers and raised supplies from Mexico, they said, adding that MRPL is scouting for a term contract with the US.

Oil imports from the US have shot up significantly to 6 million tones (mt) in 2018-19 compared with 1.4mt in 2017-18.

Sources said there were provisions in the term contracts with the West Asian producers to supply more when needed, and these would be tapped to meet the needs of the country.

In 2018-19, India imported close to 10 per cent of its domestic oil requirement from Iran as it offered commercially attractive terms, including a 60-day credit period and discounts on oil and insurance.