India, which is Iran's second biggest oil customer after China, plans to halt imports from April, primarily to avoid losing insurance coverage for its refineries.
India has been boosting imports from West Africa. The Financial Times reported these are expected to reach some 15 million barrels from Angola and Nigeria in April, compared to 10 million barrels in February.
Iran was India's seventh largest supplier of crude in the first nine months of the current financial year, a precipitous drop from third after sanctions drove New Delhi to buy elsewhere.
Under recently tightened U.S. and EU sanctions, India cannot deposit dollars or euros in any foreign bank to pay for Iranian oil imports as Tehran's financial channels are choked off.
The main factor here is the extension of sanctions to on the insurance of local refiners.
Insurers have warned Mangalore Refinery and Petrochemicals, India's largest importer of Iranian crude, and Hindustan Petroleum Corp. they will lose their cover if they go on processing Iranian crude.
India imports about 330,000 bpd of Iranian crude, about one-quarter of Tehran exports of 1.3 million bpd.
Until a few weeks ago, Iran was selling nearly all its exported oil to four main Asian customers: China, India, South Korea and Japan, even though all had significantly reduced their imports in recent months.
Now Japan and South Korea, like India, are to cut back Iranian imports from April.
"In its first official calculation of the impact of sanctions, Tehran last month predicted a 40 percent decline in its oil revenues in the next fiscal year, which began March 21," the Financial Times reported.
Tehran didn't specify the volume it was expected to sell but the Iranian media have put this at between 900,000 bpd and 1.06 million bpd, a crippling plunge from pre-sanctions levels of more than 2.5 million bpd.
All this means Iran's oil production is facing long-term decline.
Its once-thriving energy sector has been eroding steadily since the 1970s because of falling investment, energy subsidies and sanctions of various kinds.
In the fourth quarter of 2012, Iranian production sank to its lowest level in 23 years, 2.65 million barrels per day in October of that year. It went up slightly to 2.66 million bpd in December, but it's been downhill since then.
It lost its position as the No. 2 producer in the Organization of Petroleum Exporting Countries, slipping to fifth place and is poised to drop even further.
But for all that, the Islamic Republic still has major energy reserves. Its stated oil reserves of 150 billion barrels constitute the fourth largest in the world, or 9.3 percent of the global total.
It also has 1,100 trillion cubic feet of natural gas, the second largest after Russia and 15.8 percent of world reserves.
But the current sanctions regime, imposed in June 2010, has succeeded in choking off the flow of investment and advanced technology that Iran's energy sector badly needs, and has done for many years.
This has made it more difficult to arrest the production decline, not just in the oil sector but gas as well, and the Iranians have long sought to boost their gas production from rich fields in the Persian Gulf.
One of the most severe blows for Tehran was the 2012 withdrawal of the China National Petroleum Co. from Phase 11 of development of the vast South Pars field. The project was had been expected to deliver 2 billion cubic feet of gas per day but that's not likely anytime soon since local contractors have had to step in.
"Although some Iranian contractors have made adept use of their ties with mainly Asian partners to bring in technology and can carry out projects under the supervision of foreign companies to ensure the job is done properly, this can only at best represent a temporary solution," the Middle East Economic Digest observed.
"Without a change in the political situation, Iran is facing a long-term deterioration of its oil assets and the stunting of the enormous potential of its still largely untapped natural gas reserves."