In a development that is likely to affect crude oil supplies to the country, India has banned U.S.-sanctioned Iranian ships from entering its waters.

“We were to import four tankers, or cargoes of about90,000 tonnes each, from Iran in July. But we were able to get only one as the cost, insurance and freight (CIF) approval was withdrawn by the government,” Mangalore Refineries and Petrochemicals Limited (MRPL) managing director P.P. Upadhya told journalists here on Friday.

After the European Union’s sanctions came into effect on July 1, the Centre allowed MRPL and other companies to import crude from Iran in ships arranged by Tehran and on a CIF basis. It was left to Tehran to arrange for ships and insurance. However, permission was revoked within days.

The U.S. imposed sanctions on the National Iranian Tanker Company and its 58 vessels. In 2011-12, MRPL contracted for supply of 7.3 million tonnes of crude from Iran, but imported only 6.2 million tonnes. India cut imports to win a waiver from the U.S. sanctions. But the waiver for crude imports did not cover shipping, MRPL Director (Finance) Vishnu Aggarwal said.

Crude imports from Iran are possible only if the state insurers, led by General Insurance Corporation (GIC), provide cover for domestic ships carrying Iranian crude. However, the matter of sovereign guarantee for ships is still pending with the government.

GIC has agreed to provide domestic ships with $50-million cover for hull and machinery and a similar one for protection and indemnity, but this has been delayed as the company has not got approval from the insurance regulator.

Mr. Upadhya said MRPL had imported 1.2 million tonnes of crude from Iran so far this fiscal begun April 1. To compensate for the loss of Iranian supplies, the company almost doubled its purchase from the spot market. It was now buying up to three cargoes or shiploads every month, instead of one as it did earlier. This year, it started buying oil from Iraq after signing an annual contract for 11,000 barrels a day or just over 0.5 million tonnes. It bought 2.5 million tonnes on a term contract from Saudi Arabia and another two million tonnes from Abu Dhabi.

Mr. Agrawal said the company covered supplies of up to nine million tonnes this year from overseas sellers and domestic fields like Bombay High. Of the 14.5 million tonnes of crude processing planned for this year, the company depended on Iran for only five million tonnes. “Even out of this, we have imported 1.2 million tonnes. So the uncovered supplies are very less.”