A resurgence in Saudi Arabian supplies of crude oil to India coupled with an attack on an Iraqi tanker in August carrying crude to Europe may result in improved bargaining power for India with West Asian and Russian suppliers for winter supplies.
Shipments of Saudi oil rebounded in September from August, surging to the highest since March while Russian oil shipments rose marginally as Saudi Arabia tried to claw back market share in Asia, according to industry sources and ship tracking data.
Saudi Arabian supplies to India surged by 40 per cent to 727,000 barrels per day (bpd) last month from August and by 53 per cent from a year earlier, according to data from market intelligence agency Kpler.
Saudi shipments may continue to be strong this month after Riyadh slashed premiums on its grades to Asian buyers, an Indian refining official said.
The resurgence in Saudi shipments is remarkable given that supplies had plunged to over a two-year low in June at around 425,000 bpd when rival Russia had increased shipments to over 2 million bpd, a near record, ship-tracking data shows.
Attempts by Saudi Arabia to regain market share also dovetails with reports that Riyadh plans to focus on volumes rather than on premium pricing.
The rise in imports comes amidst limited supplies from Russia, and stronger import demand to ramp up refinery runs, said Singapore-based Serena Huang, head of Asia-Pacific market analysis, at market intelligence agency Vortexa.
India s imports of Saudi crude totalled 735,000 bpd in September, up 46 per cent from August, according to Vortexa.
A rebound in Saudi shipments to India has also come at the expense of rival Iraq, India s second biggest crude supplier after Baghdad started focusing on higher paying European buyers earlier this year, industry sources said.
But an attack by the Houthi rebels in late August for the first time on an Iraqi tanker carrying oil to Europe via the Red Sea has created complications, because alternate routes around Africa increase costs and shipping times, said industry officials.
The tanker attack may prompt Iraq to focus more on Asian buyers like India, leaving New Delhi with a variety of supply choices in the next few months at competitive rates from Russia, Iraq and Saudi Arabia.
That will increase the bargaining power of Indian refiners, refining officials said.
Higher purchases of Saudi crude offers India more diplomatic heft to attract investments from Saudi funds into Indian infrastructure projects, officials said.
Since the shelving of the $44 billion Ratnagiri refinery and petrochemical project, the country s biggest where Saudi Arabia had partnered Indian state oil companies, India has found it difficult to attract Saudi investments, said a government official.
Higher prices
Indian refining officials told Business Standard that higher Saudi official selling prices may have been acceptable prior to the arrival of discounted Russian grades to India, because of a lack of supply alternatives: But not any longer.
Russia continued to dominate India s oil landscape in September, with shipments increasing by 6 per cent on the month in September to 1.88 million bpd, according to Kpler data.
There was more availability of Russian oil in the market because of maintenance programmes at facilities in Russia and Belarus, industry sources said. Discounts, on a delivered basis to Brent benchmark, have also normalised in the $3-$4/bbl range, a state-run refiner said.
Russian oil shipments to India rebounded in September after a 17 per cent decline in August over July because of lower availability of oil.
Russia's overall crude exports had declined by around 8 per cent in August to 4.6 million bpd from a January-April average as a result of the country's production cut under Opec+ commitments and higher draw on crude from Russian refineries, US publisher Energy Intelligence reported.
Amid a Russian onslaught, Saudi Arabia has been concerned over lower imports of its crudes from China and India, industry officials said.
China's imports of Saudi crude plunged to 1.25 million/ bpd in August - their lowest level in more than two-and-half years because of competition from other crudes and high Saudi official formula prices, Energy Intelligence reported.
Saudi OSP
Saudi Aramco slashed the premium charged over Oman/Dubai benchmark for Asian buyers in October by 50c-$1/bbl from September for grades ranging from super light to heavy, according to a Aramco document, reflecting concerns in Riyadh over eroding marketshare to its OPEC+ partner Russia, industry officials said.
The premiums were higher in September from August by only around 10c/bbl reflecting the pullback in Saudi's oil pricing regime to buyers led by China and India.
The Financial Times said in a report last week that Saudi Arabia is ready to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output.
This means that it will relax the voluntary cuts imposed by Opec+ in December, releasing more volumes to the market even if prices trend lower, industry sources said.
The share of Saudi oil in India s crude basket increased by 16 per cent in September from as low as 9.2 per cent in June, according to calculations by Business Standard based on ship-tracking data.
Iraq's share was around 19 per cent during the period at 874,000 bpd with Russia maintaining the largest share at 40 per cent.
India's crude imports increased by around 5.6 per cent in September to around 4.7 million bpd on the month and by around 11 per cent from a year earlier.
