India will buy some 36 percent less crude oil from Saudi Arabia next month, unnamed sources told Reuters soon after the Kingdom said it would increase its official selling price for oil for its Asian buyers.
Saudi Arabia said this week it would hike its crude oil prices for Asian buyers by $0.40 per barrel and cut those for European and U.S. buyers by $0.20 and $0.10 per barrel, respectively. The price increase concerns May cargos.
This means the May shipments price for Arab Light—Saudi Arabia’s flagship grade—will cost Asian buyers $1.80 above the Oman/Dubai average, which is used as the basis for price-setting. The Oman benchmark was trading above $63 a barrel at the time of writing, and the Dubai contract was above $64 a barrel.
India is the second-largest oil buyer in Asia after China, and it is even more dependent on imports than its neighbor: India imports some 80 percent of the oil it consumes, which makes it particularly vulnerable to any price movements.
India has been vocal in its opposition to the OPEC+ efforts to keep prices higher. Government officials have called on OPEC+ to stop controlling prices, saying this could threaten India’s economic recovery. As one of the two biggest drivers of long-term oil demand, this makes the subcontinent as vital for OPEC as OPEC oil is for the subcontinent.
Now Reuters reports that according to its sources, four big refiners, including Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp, and Mangalore Refinery and Petrochemicals, have placed orders for 9.5 million barrels of Saudi oil next month. That’s down from earlier plans for purchases of 10.8 million barrels. It is also much lower than the usual monthly intake of Saudi crude by the four, according to Reuters. That stands at 14.8 million barrels.
By Irina Slav for Oilprice.com
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