Brent crude oil prices fell more than 1 percent on Monday after Washington said it may grant waivers to sanctions against Iran's oil exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran. The sources said India and Iran are discussing reverting to rupee trade after November 4.
The US withdrew from a deal on Iran's nuclear program in May and will individually impose sanctions on Iran's crude oil consumers on November 4.
Global benchmark Brent crude oil futures LCOc1 were at $83.26 per barrel at 0352 GMT, down 90 cents, or 1.1 percent, from their last close.
India was discussing options to buy Iranian oil with all authorities, according to Pradhan who said the country was considering a different payment system to purchase crude from Iran. It hit a four-year high of $86.74 last week.
Addressing foreign governments seeking to circumvent renewed U.S. sanctions, he added: "As I've said to them, it's like a book that was written several decades ago in this country- it was called something like the 'Six Stages of Grief.' You know, first you have denial, then you have anger".
Iran accounts for 10% of India's crude oil imports, making it the second largest importer of Iranian oil behind China.
"The U.S. appears to be abandoning its tough stance on buyers of Iranian oil", said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. -Chinese trade war could slow down economic growth also weighed on crude on Monday. This rupee it uses for paying for imports of medicines and other commodities.
Oil rallied to the highest in nearly four years earlier this month on concerns that OPEC and its allies aren't raising output quickly enough to make up for the squeeze on Iranian shipments.
Saudi Arabia had previously claimed it had successfully replaced Iranian crude oil supplies lost through United States sanctions.
These concerns remain. Innes warned that limited spare production to deal with further supply disruptions meant "the capacity is quickly declining due to Asia's insatiable demand".