Government has requested state refiners to hurry up the diversification of oil imports to step by step lower their dependence on the Middle East after OPEC+ determined final week to largely proceed manufacturing cuts in April, two sources mentioned.
India, the world’s third greatest oil importer and shopper, imports about 84 per cent of its general crude wants with over 60 per cent of that coming from Middle Eastern international locations, that are sometimes cheaper than these from the West.
Most of the OPEC+ producers, led by world’s high exporter Saudi Arabia, final week determined to increase most output curbs into April.
India, hit exhausting by the hovering oil costs, has urged producers to ease output cuts and assist the worldwide financial restoration. In response, the Saudi vitality minister informed India to dip into strategic reserves crammed with cheaper oil purchased final 12 months.
“We have asked companies to aggressively look for diversification. We cannot be held hostage to the arbitrary decision of Middle East producers. When they wanted to stabilize the market we stood by them,” mentioned a authorities supply.
Government had not cancelled any cargo of crude oil from the Middle East in 2020 when oil demand collapsed resulting from COVID-19, the supply mentioned. Already OPEC’s share in India’s oil imports declined to a historic lows throughout April 2020-January 2021, the primary ten months of this fiscal 12 months.
While preliminary prices may very well be excessive, the technique will repay in the long run, the supply mentioned.
Two oil refiners confirmed that the federal government had requested them to expedite efforts to diversify crude import sources.
One plan is to import oil from new producer Guyana, the sources mentioned. The nation’s high refiner Indian Oil Corp has additionally renewed its oil import contract with Russia, they added. India hopes to renew Iranian oil imports this 12 months.
Oil ministry and IOC didn’t reply to requests from Reuters for remark.
Iraq and Saudi Arabia are the 2 greatest oil suppliers to India. This 12 months, Iraq has lower annual provide volumes whereas Kuwait has shortened the length of contracts with Indian consumers to 9 months.
After OPEC’s final week resolution, crude oil costs rose to over $71 per barrel though the costs eased to $69.08 a barrel by 1027 GMT. Saudi has additionally raised April official promoting value of its oil for Asia.
“A beginning has to be made. No one had imagined that U.S. oil will account for a significant share in our crude basket. We are trying for shorter-term contracts with new countries and sellers,” the primary supply mentioned.
“The world was together during the pandemic but now it seems some producers are working for their own economies,” mentioned the primary supply.