Exclusive: India prepares Saudi oil import cut as standoff escalates: sources

NEW DELHI (Reuters) – Indian state refineries plan to cut Saudi Arabia’s oil imports by roughly a quarter in May, in a growing showdown with Riyadh following OPEC’s decision to ignore calls from New Delhi for help. to the world economy with increased supply. .

Two sources familiar with the discussions said the move was part of the government’s campaign to reduce dependence on Middle East crude.

Indian Oil Corp, Bharat Petroleum Corp., Hindustan Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd are preparing to lift around 10.8 million barrels in May, the sources said on condition of anonymity.

State refineries, which control about 60% of India’s 5 million barrels per day (bpd) refining capacity, together import an average of 14.7-14.8 million barrels of Saudi oil in a month, sources said.

India, the world’s third-largest oil importer and consumer, imports more than 80% of its oil needs and is heavily dependent on the Middle East.

Hard hit by rising oil prices, India’s oil minister Dharmendra Pradhan has repeatedly called on the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC +, to ease supply restrictions. .

He has blamed Saudi Arabia’s voluntary cuts for contributing to a rise in world oil prices.

OPEC + decided this month to extend most of the cuts until April. In response to Pradhan’s request, Saudi Energy Minister Prince Abdulaziz bin Salman suggested that India turn to strategic reserves filled with cheaper oil bought last year.

India’s Petroleum Ministry responded by calling on refineries to accelerate diversification of crude sources and reduce dependence on the Middle East.

Indian refineries were unable to cut oil imports from Saudi Arabia in April as the nominations were placed ahead of the OPEC + decision in early March, the sources said, adding that the plans for May were preliminary and that final May nominations would be known in early April.

Saudi Arabia has cut April oil supplies for some Asian refineries, but has maintained average monthly volumes for Indian refineries. However, the Kingdom has rejected the demand for additional supplies from Indian companies.

The Middle East’s share of India’s total imports has already slumped to a 22-month low in February.

In February, the United States emerged as India’s second-largest supplier after Iraq, while Saudi Arabia, which has always been one of India’s top two suppliers, fell to fourth place for the first time since at least January 2006.

Two Indian refineries – IOC and MRPL – have also issued tenders for oil for delivery in May. [CRU/TENDA]

“Oil companies make their own decision regarding the purchase of crude,” the oil ministry told Reuters. State refineries did not respond to a request for comment from Reuters.

Report by Nidhi Verma; edited by Barbara Lewis


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