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Iraq was the largest oil supplier to India in 2020, and the long-term reduction in Basra crude supplies could erode Baghdad’s market share of the world’s third largest oil importer and consumer.
The sources said that the Iraqi Oil Marketing Company (SOMO) reduced the quantities of Basra crude with fixed-term contracts for the year 2021 to a number of Indian refiners between ten and 20 percent. Sumo did not immediately respond to a request for comment.
A source at an Indian refining company said, “We never expected Iraq to reduce quantities … Perhaps we should look for alternatives such as resorting to the spot markets … This happens at a time when we are preparing to increase operating rates in conjunction with the recovery of fuel demand.”
One of the sources said that SOMO had told Indian refiners that they had reduced annual contracts for all Asian buyers to compensate for the excess quantities they produced last year.
Iraqi Oil Minister Ihsan Abdul-Jabbar said earlier in January that his country would remain committed to OPEC’s decisions and compensate for its extra production.
The changes in the supply of fixed-term contracts come as Iraq launched a new variety of low-sulfur crude, Basra Medium, in January by separating the current Basra Light crude production into two classes to improve the quality of its oil. SOMO also exports a third grade, Basra Heavy Crude.
The sources said that SOMO reduced supplies by fixed-term contracts to the Indian Oil Corporation, the largest refining company in the country and the largest customer of Iraq in India, by ten percent to about 350 thousand barrels per day for all Basra raw materials, while the quantity of the Mangalore Refining and Petrochemical Company decreased 17 percent to 50 thousand barrels. Daily.
The sources said that SOMO plans to reduce the oil contract for Bharat Petroleum by about a quarter compared to 100,000 barrels per day last year, adding that discussions with Bharat are still ongoing, as the annual contract for the Indian company begins in April.
Hindustan Petroleum, which buys Basra Light crude, has asked SOMO to reduce its fixed-term supply to about 50,000 bpd in 2021, down from 80,000 bpd in 2020.
They said that Iraq had agreed to Hindustan Petroleum’s request to reduce supplies, while the two companies were in talks about additional supplies of Basra Medium crude. The annual oil contract for Reliance Industries, the operator of the world’s largest refining complex, has also changed.
The sources said that Reliance would get 33 thousand barrels per day of Basra medium crude instead of 66 thousand barrels per day of Basra Light crude. Indian refiners did not respond to requests for comment.