According to data from commercial sources, the United States surpassed Saudi Arabia to become the second largest oil supplier to India, after Iraq, last month, as refiners increased their purchases of cheaper American crude to unprecedented levels, to compensate for the production cuts from the Organization of the Petroleum Exporting Countries. And its allies, within the framework of the OPEC + group.
The shift in supply levels, which resulted from the decline in demand for US crude, coincides with an additional voluntary reduction in Saudi production, of one million barrels per day, in addition to any agreement by OPEC and its allies to continue production cuts.
The data showed that India’s imports from the United States, the world’s largest producer, rose 48%, to an unprecedented level, at 545,300 barrels per day in February, compared with the previous month, which constitutes 14% of India’s total imports last month.
On the other hand, the data showed that February’s imports from Saudi Arabia fell 42%, compared with the previous month, to the lowest level in ten years, at 445,200 barrels per day. Saudi Arabia, which has traditionally been one of India’s two largest suppliers, slipped to fourth for the first time since January 2006.
“American demand has been weak, and the refineries are operating at low rates in the United States,” said Ihsan Al-Haq, an analyst at Refinitiv. US crude should go somewhere, and Asia is the region that is recording a fast recovery in demand. ”
“China is not buying US crude because of trade problems, so India is the obvious choice,” he said.
The data showed that Iraq remained the largest supplier to India, despite the 23% decline in purchases to the lowest level in five months, at 867 thousand and 500 barrels per day.
Nigeria rose to third place from fifth place, with exports amounting to 472,300 barrels per day, the largest since October 2019.
The data also showed that India imported 3.92 million barrels per day of oil in February, down 18% from January.
Ihsan-ul-Haq said that India may have imported less in February because it assumes, like others in the market, that OPEC + may limit production cuts, which will likely lead to lower prices.
India has repeatedly called on major crude producers to ease supply restrictions, and has cited Saudi voluntary oil cuts as a contributing factor to the rise in global oil prices.
India, the world’s third largest importer and consumer of oil, imports about 84% of its crude needs, and relies heavily on the Middle East.
Its government asked refineries to accelerate diversification of crude sources, after the Saudi Energy Minister asked India to use strategic reserves of oil that it bought cheaply last year, in response to India’s calls for producers to limit production cuts.
The share of the Middle East in India’s total imports decreased to its lowest level in 22 months, by 52.7%, while Africa’s share rose to 15%, the highest rate since September.
“The widening difference between WTI crude and Brent crude during the months of December and January, with relatively low shipping rates, provided India with an opportunity to buy American oil, to compensate for the decline from Middle East suppliers,” Ihssan Al-Haq said.
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