From being the second-biggest buyer of last year, India has risen as the top buyer of US crude in the first quarter of the calendar year 2021, being the world’s third-largest oil consumer looking at alternate sources of crude oil for lifting output curbs, and reining in the prices amidst a dispute with Saudi Arabia, the world’s largest producer.

 

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Indian refiners remained the second-largest buyers of US crude oil in the calendar year 2020 catching up to 287,000 barrels per day which were 26% more than 2019, accounting for approximately one-tenth of the total US crude exports in 2020. According to an executive one of the state-run oil refiners, Saudi Arabia staving off India’s request to boost production to cool prices has caused the Indian refiners to replace some of the Saudi volumes with the US cargoes at the direction of the government. This caused a marked change in crude oil sourcing, with India becoming the largest buyer of US crude, industry data indicated the importing of an average of 421,000 b/d of US crude oil between January and March, more than the volumes bought by South Korea at 313,000 b/d and China with 295,000 b/d. In 2020, China was the largest buyer of US crude with average volumes quadrupling to 461,000 b/d compared to 2019.

Oil Minister Dharmendra Pradhan had earlier urged OPEC and its allies, to pump more crude oil to check rising prices, as India imports 85% of its oil needs it was damaging India’s economic recovery. As part of its crude sourcing diversification strategy, Indian refiners have recently bought crude oil from new producers such as Guyana. Iraq is India’s top supplier of crude oil. The Middle East has been the favorite crude oil sourcing destination for Indian refiners because of its closeness and cheaper freight rates. On the other hand, the voyage distance is more than eight times longer from the US Gulf to India than from the Middle East, translating into longer transit times and higher freight costs.

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