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India continues its efforts to shake off its oil dependence on OPEC’s decisions by asking its state refiners to review what it sees as contracts “loaded against the buyer” with Saudi Arabia, a top Indian official told Indian media on Friday.
India, which relies on imports for more than 80 percent of its consumption and whose imports from the Middle East account for around 60 percent of all foreign shipments, has been displeased with the OPEC+ oil supply management since the beginning of the year, unhappy that high oil prices are lifting its import bill and domestic inflation.
Last month, India expressed its frustration with the OPEC+ decision to keep the group’s production nearly flat in April compared to March, calling out OPEC+ for its “artificial cuts to keep the price going up.”
Although OPEC+ decided on Thursday to gradually increase collective production by over 1 million bpd over the next three months, India continues to be displeased with its contracts with Middle Eastern buyers.
“While buyers have an obligation to lift all of the contracted quantity, Saudi and other producers have the option to reduce supplies in case OPEC decides to keep production artificially lower to boost prices. Why should the consumer have to pay for decisions of OPEC?” the Indian official with direct knowledge of the matter told the Press Trust of India.
The terms of the OPEC producers for selling their oil to India “have often been loaded against the buyer,” the official noted.
In recent weeks, Indian refiners have gone shopping as far as North and South America, buying some crude grades for the very first time, as the world’s third-largest oil importer looks to diversify its oil imports away from the Middle East. HPCL-Mittal Energy Ltd, a joint venture of state-run Hindustan Petroleum Corporation and steel tycoon Lakshmi Mittal, has bought the country’s first-ever crude oil cargo from the newest oil-producing nation, Guyana, while Mangalore Refinery and Petrochemicals has booked a cargo of Brazil’s grade Tupi for the first time.
India is estimated to have boosted significantly oil imports from the United States in February, while it slashed purchases from Saudi Arabia to the point of America overtaking the Saudis as India’s second-largest oil supplier.
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.
India didn’t complain when in 2020 had bought vast volumes of crude oil from OPEC+ members at prices as low as $20 a barrel but it started to complain when OPEC+ supported higher oil prices.
India as a budding economic superpower has to accept gracefully that oil is volatile by nature and therefore its prices change from one day to the other by the diktats of the market and that OPEC+ has to look after the interests of its members.
If India can’t accept this fact, then it could go and shop for its oil needs somewhere else but it won’t go far in securing its needs.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London