India to Cut Imports of Saudi Crude in May

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India's state-owned refiners are cutting their May imports of crude oil from Saudi Arabia, people familiar with the matter confirm to Energy Intelligence. The move comes against a backdrop of persistent criticism from India about the slow pace at which the Opec-plus alliance has been unwinding the big production cuts it started to implement in May of last year (IOD Apr.1'21). It also coincides with a new wave of Covid-19 infections and related lockdown measures in India, which could dampen demand for oil in the world's third-largest oil-consuming nation (IOD Mar.19'21). "There are huge economic challenges as India and most other importing countries are battling with a new wave of Covid," said independent energy expert Narendra Taneja. "This excessive cartelization, even in times like these, is unfair." Industry executives have not provided details about the likely magnitude of cuts in India's crude oil imports from Saudi Arabia in May. But Reuters, quoting unnamed sources, reported that the country's major state-owned refiners have placed orders for 9.5 million barrels of Saudi crude for next month, compared with earlier plans for May imports of 10.8 million bbl. The news agency said they would more typically buy some 14.8 million bbl a month of Saudi crude. Disappointment With Opec-Plus Arindam Bagchi, a spokesman at India's Ministry of External Affairs, expressed disappointment on Friday about the "slight easing of crude oil production cuts" announced by Opec-plus on Thursday. "We've always believed that crude supply should be market determined rather than artificially managed," he said. Saudi Arabia and Russia are the two biggest producers within Opec-plus and the Saudis are one of the main targets of India's frequent complaints that the alliance's production cuts have pushed up oil prices and hurt big importers like India. But an industry executive, who asked not to be named, said that India's complaints about oil prices and its threats to buy less oil from certain producers would only carry weight as long as global demand remained relatively weak. A return to more normal levels of demand would leave the country with few realistic alternatives to importing more Middle East oil, he added. Encouraged to Diversify Although India's state-owned oil refiners are free to buy crude from wherever they want, the government has encouraged them to approach suppliers as a group to bargain for more favorable terms. The ministry has also asked refiners to diversify their sources of crude imports, arguing that India relies too heavily on Middle East producers, which typically account for more than 60% of the oil it uses. The refiners currently buy more than 70% of their crude under long-term supply deals but have been looking at buying more oil on the spot market to give them the flexibility to seek out better deals. India's push for diversification of crude oil supplies is in fact nothing new, however. For example, Indian Oil, the country's largest refiner, reported that it added six new crude grades to its oil basket in the financial year that ended Mar. 31, 2020. In the year ended Mar. 31, 2019, it added nine new grades and the year before that 16 new grades. Rakesh Sharma, New Delhi

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