Saudi Arabia Out Of Top Three Oil Suppliers To India In February

India imported 1.8 million metric tonnes of oil from the Gulf kingdom in February, according to data released by the Directorate General of Commercial Intelligence and Statistics. It ranks behind Iraq, the U.A.E., the U.S. and Nigeria.

Indian basket of oil has jumped more than 25% so far this year even as crude cooled after March 15. Prices at the filling station hover near record highs, causing demand to fall the most in four months in February. That comes as OPEC+ nations continue with lower production at 7 million barrels a day. Saudi Arabia has voluntarily cut output by an extra 1 million bpd.

That has prompted India to diversify imports by looking for the cheapest and easily available oil, and asked state refiners to cut their dependence on the Middle East after the OPEC+ decided to largely continue production cuts in April, Reuters reported. That may be difficult, Livemint reported citing three unnamed executives from the refiners, who cited higher freight costs and finding reliable suppliers as challenges.

According to Petroleum Planning and Analysis Cell, crude shipments from OPEC countries fell to 74.4% of total imports in April to February 2021 compared with 79.6% a year earlier.

Oil imports from Saudi Arabia declined 40.5% over a year earlier in February. Shipments from the U.S. surged 131.2%, while India bought 75.2%. more from Nigeria.

A faster recovery in demand for petrol and liquefied natural gas has also allowed India to diversify supply. Demand for petrol as people prefer personal mobility is giving low-sulphur American grades an edge over heavier and more sour Middle Eastern varieties, Bloomberg reported unnamed officials at state-run refiners.

Diversification in oil supply means Colombia and Kazakhstan were among top 10 nations that shipped crude to India.

In April-February, however, Saudi Arabia was the biggest oil supplier to India after Iraq at 31.49 MMT. But shipments from the kingdom declined nearly 18% during the period.

Crude imports from the U.S. jumped 41.3% during the period. Iraq remains No. 1 supplier despite a 15.2% decline in the 11 months.

The average import price in dollar per tonne has fallen the most for oil shipped by Oman, Nigeria, and the U.S. in the last one year, while it declined the least for Kazakhstan, Iraq, and Mexico.

The total crude oil imports decreased by 18.3% and 14.2% during February 2021 and April-February 2021 respectively compared to the corresponding period of the previous year.

For effective diversification, India will have to look for suppliers of medium to heavy grade oil which is generally preferred by its refiners. Apart from Middle East producers like Saudi Arabia and Kuwait, the two other exporters of heavy grade oil are Iran and Venezuela, but both are subject to U.S. sanctions.