Asian purchases of Iranian crude fell by a quarter in February from a year ago, led by big drops in India and South Korea, although the future of Tehran's oil exports remains murky as it and six world powers race to reach a preliminary nuclear deal.

Imports by Iran's four biggest buyers - China, India, Japan and South Korea - though down on-year, bounced back to average 1.02 million barrels per day (bpd) in February, a two-month high, government and tanker-tracking data showed.

The biggest cuts came from India, where refiners had earlier been told to "virtually halt" Iranian oil imports in February-March to keep the volumes within target levels.

The foreign ministers of Iran and the United States, Britain, France, Germany, Russia and China ramped up talks this week to outline a final accord on Tehran's nuclear programme by a Tuesday deadline, with both sides saying there are still key differences to overcome.

"There are some analysts forecasting an agreement, but because of consternation in the Middle East involving Yemen, it may be difficult to settle before that's been dealt with," said a Tokyo-based industry source who declined to be identified.

Saudi Arabia and allies launched an air campaign in Yemen last week to oust Shi'ite Muslim rebels to check what Riyadh says is Iranian influence in its backyard. Tehran denies that it supports Yemen's Houthi rebels militarily.

Asia's intake of Iranian crude fell 23 per cent in the first two months of 2015, with India and South Korea importing around 40 per cent less than in the same period last year.

Iran is keen to recover market share lost under the US-led sanctions that have curbed its exports to around 1 million bpd from 2.5 million bpd in 2011. But until a final deal is reached on its nuclear activities, of the four Asian buyers, only China is likely to increase imports, sources have said.

Even if Iran and the world powers reach a tentative agreement, government officials say it could fall apart when the sides attempt to agree on the technical details for a comprehensive accord by June 30.

Also, any deal over Iran's nuclear programme that would phase out economic sanctions against Tehran is unlikely to flood world markets with more oil any time soon, according to former US officials and Western diplomats.

Nevertheless, oil prices extended losses on Tuesday, as the deadline loomed for an agreement that could ease sanctions and eventually allow more Iranian crude onto world markets.The West say Iran's nuclear activities are aimed at making a weapon. Tehran says it is making fuel only for power generation.

Source:- economictimes.indiatimes.com