"We have seen the United States notification, including India in the list of countries, granted significant reduction exemption for the continued purchase of Iranian crude oil without attracting U.S. sanctions, " External Affairs Ministry spokesperson Raveesh Kumar said at a media briefing.
The United States is warning other countries not to allow Iranian oil tankers into their ports, saying the tankers not only could incur penalties under USA sanctions but may be courting "environmental disaster".
The sanctions aim to isolate Iran by choking off its main source of revenue - oil exports - and they are enforced through the imposition of penalties on companies that continue to do business with Iran.
The sanctions that came into force Monday target Iran's energy, financial and shipping sectors and mark the end of US participation in the 2015 nuclear deal that President Donald Trump withdrew from in May.
The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 10:30a.m. EST.
To put that in context, the BP Statistical Review of World Energy 2018 puts global daily crude production at 92.6 million barrels per day for a year ago, so the increase is meaningful.
The U.S. sanctions, meanwhile, are unlikely to cut supply as much as expected.
The U.S. has increased output to more than 11 Mmbpd, surpassing Saudi Arabian and Russian production, although both countries have also been increasing output to offset the drop in Iranian exports. Analysts had predicted a draw of 2.572 million barrels for the week. Portfolio managers have been net sellers of 371 million barrels since the end of September, taking their net long position to the lowest level for 15 months, according to records published by regulators and exchanges. The EIA expects output to break through 12 million bpd by mid-2019, largely thanks to a surge in shale oil production. Tehran worries OPEC and non-OPEC countries such as Russian Federation will increase their production to fill the gap in response.
"An analysis of crude export weighted fiscal breakeven price for major gulf economies (Iran, Iraq, Kuwait, Qatar, Saudi Arabia and UAE) suggests optimal price level of ~$70.6/bbl".
Crude barrels seen weakening further, WTI clipping into 60.45.
China will still be allowed to import some Iranian crude under a waiver to USA sanctions that will enable it to purchase 360,000 bpd for 180 days, two sources familiar with the matter told Reuters on Tuesday.
The Americans have shown this year that they are capable of ramping up production by more than the Saudis can cut it.