New Delhi: In the backdrop of an escalation in tension between India and Saudi Arabia, state-run refiners Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) have decided to cut crude oil import from Saudi by 36 percent. With a view to diversify the sources of crude, for May, refiners have sought just 64 percent of the 15 million barrels that comes from Saudi Arabia on an average every month, sources aware of the matter told PSU Watch.
According to sources, Indian refiners will look to buy crude oil from the spot or current market over Saudi Arabia and other nations in West Asia. Recent media reports suggest that refiners are already looking at varied geographies, ranging from Guyana to Norway, to get crude oil to the country. According to a report published by Reuters on April 5, Indian Oil has already made its first purchase from Norway's Johan Sverdrup crude as it bought four million barrels via a tender. IOC has also floated a spot tender, seeking crude oil from the US, Canada and West Africa.
The decisive cut in crude oil imports from West Asia comes in the backdrop of the OPEC's decision to extend production cuts into April, ignoring pleas made by the Indian government. Minister for Petroleum and Natural Gas Dharmendra Pradhan had urged OPEC and its allies to raise production in order to stop crude oil prices from rising. However, Saudi Arabia refused to yield to the request and instead asked India to use the cheaper crude oil it had bought and stored in strategic reserves when the global crude oil prices had plummeted in 2020. In the aftermath of the OPEC decision, the government has urged state-run refiners to look beyond West Asia for crude oil supplies and diversify the sources of crude.
In February, the US crude accounted for 14 percent of India's total crude oil import, while imports from Saudi declined by 42 percent. Iraq continued to be India's biggest crude oil supplier, followed by the US and Nigeria.
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