Oil prices fell on Wednesday…
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After stalled talks with the United Arab Emirates, India is turning to Iran for 6 million barrels of crude oil as it seeks to build up its strategic reserves. India increased Iranian oil exports by approximately 600,000 barrels per day as of last month, the highest amount in the last fifteen years.
India’s refineries are looking for more oil after the country’s import negotiations became bogged down over commercial terms. According to Reuters, The National Iranian Oil Company is set to supply Iranian Mix grade, which would fill half of the Mangalore storage facility in Karnataka. Bharat Petroleum Corp will purchase four million barrels, while Mangalore Refineries and Petrochemicals Ltd will import two million barrels.
Last week, Indian officials negotiated with the National Iranian Oil Company for the increased oil purchases. NIOC Deputy Director for Marketing and Operations Safar Ali Keramati stated that if the country comes to Iran “for extra barrels, then we will do our best to accommodate their demand."
India wants to bolster its reserves as a hedge for its economy against potential negative changes in the market. It plans to store its reserves in its underground caverns. Iran of course, will benefit from the agreement as it scrambles regain its position in the market post-sanctions. The added shipments will help to ensure that Iran reaches the pre-sanction export levels of 2012 when it was moving 2.3 million barrels per day.
The agreement could also put Iran in a better seat at the table when OPEC meets in Algeria to discuss capping oil production. The country has said it would support stabilizing the market, but would only participate in a production cap after its oil output had reached pre-sanction numbers. In August, Iran’s oil exports had already hit 2.11 million barrels per day.
Lincoln Brown for Oilprice.com
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Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a…