India has decided to cut as much as 25 per cent of Iranian crude oil it buys, following a row over the right to develop a natural gas field.
Iran had already recieved a warning from India that it would reduce its purchases if an Indian consortium is not awarded the rights to develop Iran's huge Farzad B natural gas field.
India is Iran's top oil client after China and according to the reports, the import would cut to 370,000 barrels per day (bpd) of crude, from current 510,000 barrels per day (bpd).
Largest state buyers of Iranian crude, Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL), will cut imports from Tehran to 4 million tonnes in 2017-18 from 5 million tonnes in the previous year, according to an April as per the reports.
Delhi had said that it would order four state refiners including Bharat Petroleum to cut back their business with Iran.
Not all of India's refiners plan to scale back orders from Iran, though. Private refiner Reliance Industries signed its first Iranian deal in seven years to buy 30,000 bpd of heavy Forozan crude oil, one of the sources said.
Iranian Oil Minister Bijan Zangeneh had last month dismissed the threat of cutting imports, saying, "We cannot enter deals under threats."
"Using language of threats is not appropriate", Zangeneh was quoted as saying by Iranian news agency Irna. "There are a lot of customers for Iranian oil and their demand surpasses our export capacity."