The share of oil imports from the Middle East region in India’s total crude imports have shrunk by 5 percent in 2019 to 60 percent from a year ago period, which, oil industry analysts say, is due to a combination of a perceptible shift in policy by New Delhi and a fall in demand in the Indian market in the recent years.
The fall in the share of Middle Eastern oil in India’s oil import basket was the highest in the last four years since 2015, Reuters reported, quoting tanker data.
India shipped in 2.68 million barrels per day (bpd) oil from the Middle East in 2019, down about 10 percent from 2018, and around 1.8 million bpd from elsewhere, the wire agency report said.
India, which meets 84 percent of its oil requirements through imports, traditionally has been relying on the Gulf region for meeting a major part of its requirements.
“The recurring uncertainty on supplies from the Gulf region due to sudden escalation of tension in the region and pressure on India from the US for increasing shale oil imports are leading to shrinking of the share of Middle Eastern oil in India’s import basket,” Amit Kumar, oil sector analyst with PwC India, told Arabian Business.
“Though the logistic cost for imports from the US would be higher compared to that from the Middle East region, the latest trend (on oil imports) is an indication that India wants to lessen its dependence on imports from the latter,” he added.
Oil industry analysts said larger production cuts by Saudi Arabia and other OPEC members and allies, and supply disruption from Iran after re-imposition of sanctions by the US last year have also contributed to the fall in intake from the Middle East region by India.
“India is clearly shifting its policy to expand the supply sources for its oil imports,” Tsunduru Muralidhar, petroleum industry expert and independent industry consultant, told Arabian Business.
“Indian refiners will be increasingly looking at ‘net back value’ to use shale oil or heavy crude from Russia because of the changing demand situation for various petroleum products in India,” Muralidhar said.
He, however, said the Middle East region will still continue to be a major source for Indian refiners as most of the refinery plants in India are designed for mixed use of Arab heavy and light crude.
India’s overall oil imports in 2019 fell by about 2.1 percent to 4.48 million bpd, according to the latest data.
Oil imports from the US accounted for about 4 percent of India’s overall imports in 2019, up from just 2.5 percent in the previous year.
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