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India’s government-run refiners plan to import less Iranian crude oil in the 2017/2018 fiscal year ending March 2018, than the crude from Iran they bought in the previous fiscal year, according to India’s Oil Minister Dharmendra Pradhan.
Iran is offering a 60-day credit period for oil deliveries this 2017/2018 fiscal year, Reuters quoted Pradhan as telling Members of Parliament in a written response to a question. In the previous fiscal year, Iran was offering a 90-day credit period for oil purchases.
Earlier this year, reports suggested that India would reduce the amount of crude that it imports from Iran by 20 percent in the 2017/18 financial year to punish Iran for delaying the license decision on a major gas field for which an Indian company had submitted a bid.
One of the beneficiaries of India’s decision has been the United States. Earlier this week, Bharat Petroleum became the second Indian refiner to start buying U.S. crude oil, after Bharat purchased 500,000 bpd of Mars and the same amount of Poseidon crude—in what was India’s second crude oil purchase in two weeks. Indian Oil Corp., the country’s top refiner, was the first Indian company to purchase US crude, purchasing 1.6 million barrels of Mars crude last week.
So far, India’s biggest suppliers of crude have been Middle Eastern producers, Asian ones, and producers from Africa, but now the world’s third-largest consumer of the commodity is looking to diversify its sources of crude as U.S. and Canadian crude become more competitive after an overhaul at Indian refineries that made heavier crude blends a new favorite since they are cheaper than lighter ones.
Still, India has set a target to reduce its oil imports dependence by 10 percent by 2022. The imports reduction is expected to be achieved by boosting domestic oil production and increasing the share of natural gas and other energy sources in the energy mix. S&P Global Platts analysts, however, reckon that India will be unable to achieve this target, considering India’s robust oil and oil product demand growth.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.