India will further diversify its oil imports to better prepare for future OPEC+ production cuts that raise oil prices and tighten supply for the world's third-largest crude oil importer, Indian Petroleum Minister Hardeep Singh Puri said on Friday.
Last week, OPEC+ announced the biggest cut to its collective target since 2020. Despite the headline number of 2 million bpd, the actual cut from current OPEC+ oil production would be half that figure, at around 1 million bpd-1.1 million bpd. That's because many producers, including Russia in recent months, haven't been able to produce to their quotas for months.
Still, the large OPEC+ production cut is bad news for India, which depends on imports for more than 85% of its crude oil consumption. Around 60% of India's crude oil imports come from the Middle East. However, this share has been falling in recent years as refiners have started to diversify and look for bargain supplies.
"Some diversification has already happened and we will further diversify...there are many sources and we will not hesitate to take actions," India's minister Puri said at a local event today, as carried by Reuters.
The OPEC+ cut, which enters into force in November, "will hurt large importers like India, who spent around $120 billion last year on the import of petroleum products," the minister added.
India has recently imported large volumes of Russian oil due to the cheap supply with hefty discounts on the Russian grades compared to benchmarks. But those discounts have narrowed in recent weeks, Puri said.
India is also looking to lock in term purchase contracts with crude producers, expecting a redirection of trade flows and a tighter market when the EU embargo on imports of Russian crude enters into force in early December. Major state-held refiners in India, including the biggest refiner Indian Oil Corporation, and Bharat Petroleum, are looking to sign term deals with major producers, expecting more Middle Eastern crude to flow to Europe once the EU bans Russian imports, officials at the refiners told Reuters earlier this month.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More