Middle East’s share in India’s crude oil import basket falls to 25-month low in May

• Crude oil imports from Saudi Arabia, India's second-largest supplier of crude oil after Iraq, declined by about a quarter in comparison to the previous year
• Oil refiners increased imports from Latin America, the United States (US) and the Mediterranean to replace Middle Eastern crude oil

New Delhi: The share of Middle East crude oil in India's import basket fell to a 25-month low in May as Indian refiners opted to dial down imports from the region in the wake of a direction issued by the government to diversify supplies. Quoting tanker data provided by trade sources, Reuters said in a report that the share of Middle East dropped to 52.7 percent in May, down from 67.9 percent in April, and was the lowest on record since April 2019.

Crude oil import from Saudi declined by a quarter

Crude oil imports from Saudi Arabia, India's second-largest supplier of crude oil after Iraq, declined by about a quarter in comparison to the previous year, said the report. And supplies from the United Arab Emirates (UAE), which used to be India's third-largest supplier of crude, fell by 39 percent. Lower purchases of oil from the Middle East region have dragged OPEC's share in India's crude oil import basket to a record low.

So, where is India getting crude oil from?

According to the report, oil refiners increased imports from Latin America, the United States (US) and the Mediterranean to replace Middle Eastern crude oil. "Indian refiners bought higher volumes of gasoline-rich US oil in March, expecting a recovery in local gasoline demand to continue in the months ahead," Ehsan Ul-Haq, lead analyst for Oil Research and Forecasts at Refinitiv, was quoted as saying.

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On account of a strong demand for light crude, Nigeria improved its ranking by two levels to become the third-largest oil supplier to India in May. Private refiners like Reliance Industries Ltd (RIL) and Nayara Energy, however, purchased a record 2,44,000 bpd of Canadian heavy oil, equivalent to about 6 percent of India's overall imports. "Indians bought Kazakhstan's CPC blend and Canadian oil due to attractive discounts in comparison to dated Brent and WTI, respectively," said Ul-Haq.

The backdrop

India is the world's third largest oil importer. It imported around 4.2 million bpd of crude oil in May, which was around 31.5 percent higher when compared to May 2020, the data showed. The dip in Middle East's share in India's crude oil imports comes after the government asked refiners in March to diversify crude oil sources. The direction was issued after the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, led by top exporter Saudi Arabia, ignored India's calls to ease supply curbs to cool off global crude oil prices.

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