India ramped up crude oil imports from its traditional suppliers including Iraq and Saudi Arabia as the country’s oil demand increased in September. India’s imports from Iraq and Saudi climbed by 16 percent and 37 percent, respectively, in the month, showed data from energy cargo tracker Vortexa.
India imported 894,000 bpd of crude from Iraq in September, compared to 771,000 bpd in the previous month, while Saudi Arabia supplied 688,000 bpd against 501,000 bpd of crude oil in August.
Russia, however, remained the top supplier of crude oil to India in the month supplying 1.79 million barrels per day (bpd), accounting for 38 percent of the total oil imports. This compares with 1.61 million bpd supplied per day to India by Russia in August.
Total crude oil imports by India increased 12.7 percent in September on a month-on-month basis to 4.7 million barrels of crude oil per day. With the approaching festive season in the country, oil demand is expected to further increase in the coming months, leading Indian refiners to scout for more crude. India is dependent on imports of crude oil for over 85 percent of its requirement.
Softening crude oil prices in the second-half of the year is a big positive for Indian oil companies, primarily state-run oil marketing companies (OMCs) including Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL). Lower oil prices would translate into higher margins' for the refiners.
State-run OMCs have been receiving crude oil at discounted prices from Russia, which has led to share of oil from Moscow in India’s total crude oil imports rise to around 40 percent now from 0.2 percent before the war between the country and Ukraine began. However, with Russia widening its market, the discounts from the country has narrowed down to India.
Meanwhile, Russia’s increased presence in India’s oil market has led to declining imports from Middle-East suppliers. India’s oil minister Hardeep Singh Puri has emphasised that Indian refiners buy the cheapest oil available in the market, to benefit consumers at home.
Crude price volatility
Weak global oil demand, primarily from China, has weighed on prices with crude oil hovering at $72-$74 per barrel currently. The escalating tensions in the Middle-East has led to sharp jump in oil prices but experts believed the impact would be short-lived if the war does not spread to other areas.
In the recent months, oil prices have largely remained unaffected despite the raging conflict in the Middle-East. However, when Israel warned that it would respond to the barrage of 181 ballistic missiles launched by Iran at the country, oil prices shot off sharply.
Global oil prices have been highly volatile this year, breaching $90 per barrel in April due to geopolitical crisis in the Middle East, before plummeting to around $70-72 a barrel due to demand concerns from China. The benchmark Brent crude has been hovering around $70 a barrel for over a month now and slid to $69 on September 10, the lowest in three years.
The first half of the year saw relatively high prices on account of supply cuts from OPEC and its allies (OPEC+) and Middle East tensions. However, the prices soon began falling due to limited impact of war on the crude oil market.
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