Iraq set to dethrone Saudi Arabia as top supplier of crude oil to India

NEW DELHI: CementinG a three year long trend of increasing crude oil imports, Iraq is set to dethrone Saudi Arabia as India’s single largest supplier of crude oil this fiscal. According to the answer submitted by Oil Minister Dharmendra Pradhan to the Lok Sabha on Monday, Iraq has shipped 25.8 million tonnes (MT) of oil to India during the April to October period of 2017.

In contrast, Saudi Arabia, traditionally the largest supplier of crude, managed to ship only 21.9 MT. Iran remained the third largest supplier to India for the second successive year, shipping 12.5 MT of crude during the period.

According to industry analysts and officials Express spoke to, the rise of Iraq as India’s primary supplier is being spurred by several factors. The biggest however, is simple cost efficiency. “Iraqi oil is being sold at pretty significant discounts over the last few years. Even in 2016, the cost difference between Saudi and Iraqi crude had seen the latter pip the former in crude oil exports to India in the first half..,” said an industry source.

Iraq’s exports of crude oil to India have been consistently rising over the last three fiscal years. From 24.5 MT in 2014-15, to 36.8 MT in 2015-16, and 37.5 MT in 2016-17. Saudi Arabia’s shipments however declined from 40.4 MT in 2015-16 to 39.5 MT in 2016-17. “If current trends hold, Iraq will become the largest supplier of crude to India this fiscal,” another industry analyst said.

Sources say that the increase in Iraqi-origin oil imports is also connected to the modernisation Indian refineries have seen over the last few years. With better refining capabilities, Indian refineries can now shop for wider ranges of supply, which older refining infrastructure had made unprofitable. “Basra Crude is also a better choice for refineries producing bitumen, which is now in high demand in the country with big road construction plans afoot. But, at the end of the day, Iraqi crude is being sold at substantial discounts -- meaning better margins for OMCs,” said a senior OMC official.Apart from Iraq, Saudi Arabia and Iran, Venezuela (11.5 MT), Nigeria (10.6 MT) and UAE (8.5 MT) remain top crude oil suppliers in the April to October period of 2017.