India is the first of Tehran's four main buyers to say it is looking to buy more oil from Iran after the agreement in Geneva. The deal with six world powers eased some sanctions on the Middle Eastern nation in exchange for curbs to its nuclear programme.
Although the agreement doesn't allow Iran to boost its oil sales for six months, India has room to increase its imports after they tumbled around 40 percent this year to below even what was permitted by sanctions.
India intends to buy up to an average 220,000 barrels per day (bpd) of oil from Iran in the year ending March 31, Oil Secretary Vivek Rae said on Wednesday.
That's consistent with a goal of cutting India's Iran oil shipments 15 percent this year to win waivers on U.S. sanctions.
But India's April-October imports are running at less than 80 percent of that level, at about 170,000 bpd, meaning India could raise its imports between December and March and still hit the target.
One Indian state-run refiner, Hindustan Petroleum Corp Ltd. , has already said it is ready to look at buying more Iranian oil now that some of the constraints on refinery insurance have been lifted.
Sanction measures dealing with insurance coverage of ships carrying Iranian oil and refineries processing it were among the most effective in cutting Tehran's crude exports.
India would also then be looking to increase imports in the 2014/15 financial year, depending on any further easing of the sanctions, Rae said.
"Iran is a great source of oil ... and once the problems that have been faced by Iran are resolved then we will have more oil available in the market," Rae said.
Western sanctions that pressured Iran towards the deal on Sunday have slashed its exports by more than half to about 1 million bpd and cost it as much as $80 billion in lost revenue since the start of 2012.
India's crude imports from Iran plunged by nearly half in October from a year ago to 194,000 bpd, tanker arrival data compiled by Reuters from trade sources showed.
India's imports from Iran fell to about 170,000 bpd in April-October, a decline of about 40 percent from a year ago, the data shows, as two refiners halted purchases at the beginning of their fiscal year because of the insurance problems.
Mangalore Refinery and Petrochemicals Ltd, drawn by government assurance of local insurance coverage and discounts offered by Iran, resumed purchases in August.
HPCL, which also stopped purchases, remained cautious after its Vizag refinery was hit by fire twice since April, keeping it focused on the problems with insurance coverage.
With the latest deal easing insurance-related sanctions, HPCL is considering resuming Iranian oil purchases, its head of refineries B. K. Namdeo said on Monday.
Washington could announce an extension of waivers to the U.S. sanctions for China, India and South Korea this week, one of the sources in India said.
Indian refinery and government officials said the grant of the six-month waiver is just a formality this time around after Sunday's deal between the world powers and Iran.