The government of India has asked Indian refiners to prepare for a 'drastic reduction or zero' imports of oil from Iran starting this November.
Two business insiders told Reuters that the Indian Oil Ministry held a meeting with refiners Thursday in which they were told to search for alternatives to Iranian oil.
"[India] has asked refiners to be prepared for any eventuality, since the situation is still evolving. There could be drastic reduction or there could be no import at all," said one source.
The warning to refiners comes as the US urges countries around the world, including India, to comply with the sanctions the US is reimposing on Iran following President Donald Trump's decision to withdraw from the 2015 Iran nuclear deal.
On Thursday, US Ambassador to the UN Nikki Haley called on India to rethink its relationship with Iran.
Haley said she understood India "can't change its relationship with Iran in a day" but said she used a meeting with Prime Minister Narendra Modi in New Delhi to encourage a reassessment.
"I also think for the future of India, and the future of being able to get resources and who they're dependent on, I would encourage them to rethink their relationship with Iran," she was quoted as having told local broadcaster NDTV after an address in New Delhi.
"I think as a friend, India should also decide is this a country that they want to continue doing business with," added Haley.
India imports the overwhelming majority of its oil and Iran is the third-largest supplier to the nation of 1.25 billion. India was one of the few counties that continued to buy Iranian oil under the previous round of US and international sanctions which ended with the signing of the 2015 nuclear deal.