Getty ImagesState refiners slashed their orders for Saudi Arabian crude in May by a third in a signal to the kingdom that a big buyer like India cannot be antagonised, people with direct knowledge of the matter said. The gap can be made up in later months if the standoff between the two countries is resolved, they added.
IndianOil, BPCL, HPCL and MRPL, all state-run refiners, placed orders on Monday for less oil than usual from Saudi in May and plan to make up for the shortfall by buying more from the spot market, they said. Expectations of lower domestic fuel demand next month, due to Covid surge and the onset of the monsoon, has also led to the cut in Saudi oil purchases, they said.
“We need to send a signal to Saudi Arabia that India is an important buyer,” said one of the persons cited above. “This is a standoff that will have to be resolved at the diplomatic level.” Saudi Arabia’s decision in January to deepen production cuts sent oil prices soaring, igniting a war of words with India.
‘Crude Deals have Multiple Dimensions’
With elections looming in several states, India wanted the Saudis to help increase supply and calm prices. The kingdom ignored the call last month and instead suggested India dip into its oil reserves, which had been acquired at lower prices.
The situation has changed since then. The Saudi-led producers’ group agreed this month to ease supply curbs, reportedly following US intervention. This, along with the rise in Covid cases, has helped slash oil prices by a 10th.
But India, the third-largest oil importer in the world, still wants to make its point to Saudi Arabia, which regards itself as the ‘guardian’ of the oil industry.
“Crude purchase has multiple dimensions like strategic, economic, and technical — it’s the combination of these dimensions that guides the narrative,” said HPCL chairman MK Surana, underlining how oil purchase deals were not mere business contracts. He didn’t comment on his company’s Saudi oil purchase plans.
IndianOil, BPCL, HPCL and MRPL, all state-run refiners, placed orders on Monday for less oil than usual from Saudi in May and plan to make up for the shortfall by buying more from the spot market, they said. Expectations of lower domestic fuel demand next month, due to Covid surge and the onset of the monsoon, has also led to the cut in Saudi oil purchases, they said.
“We need to send a signal to Saudi Arabia that India is an important buyer,” said one of the persons cited above. “This is a standoff that will have to be resolved at the diplomatic level.” Saudi Arabia’s decision in January to deepen production cuts sent oil prices soaring, igniting a war of words with India.
‘Crude Deals have Multiple Dimensions’
With elections looming in several states, India wanted the Saudis to help increase supply and calm prices. The kingdom ignored the call last month and instead suggested India dip into its oil reserves, which had been acquired at lower prices.
The situation has changed since then. The Saudi-led producers’ group agreed this month to ease supply curbs, reportedly following US intervention. This, along with the rise in Covid cases, has helped slash oil prices by a 10th.
But India, the third-largest oil importer in the world, still wants to make its point to Saudi Arabia, which regards itself as the ‘guardian’ of the oil industry.
“Crude purchase has multiple dimensions like strategic, economic, and technical — it’s the combination of these dimensions that guides the narrative,” said HPCL chairman MK Surana, underlining how oil purchase deals were not mere business contracts. He didn’t comment on his company’s Saudi oil purchase plans.
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10 Comments on this Story
 | Chandan Joshi11 hours ago Use innovation as tool. Indian are master in Jugad but here we need ground breaking innovation to replace fossil fuel with other routes of energy. Fortunately this Gov is taking right steps otherwise COngress in only interested to import and loot the country |
 | Acme Consortium12 hours ago IS THERE NO ONE .AS BRAD PITT SHOUTS IN THE MOVIE " TROY" WHO CAN CONVERT OUR BELOVED PM MODI's DREAM OF TAPPING " GAS FROM GUTTER" INTO REALITY. THAT WAY ALL OUR VEHICLES WILL RUN ON CNG & WE WON'T NEED TO BUY OIL FROM OPEC OR OTHER WRETCHED COUNTRIES OUT THERE TO FLEECE US |
| The Traveller12 hours ago india needs to exploit & fully utilize it's solar power capabilities so as to reduce it's dependence of fossil fuels aka crude oil. a good starting point would be to install solar powered electric charging points along major roads & highways and encourage electric vehicles, by reducing duties on such vehicles and increasing taxes on diesel & petrol passenger vehicles for starters. This will cal for massive investment in solar powered infrastructure along highways and arterial roads. next step would be that all new buildings/ houses being construction should mandatorily fulfill 50 to 75% of their power requirements using solar power - Aatmanirbar incentives - duty & tax holidays being given to cos that manufacture Solar panels / equipments. Reliance on fossil fuels and the consequently greenhouse gas emissions will reduce. The government will have to take really hard decisions against a lot of lobbies to achieve this. |