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India imported more than 1 million bpd from Iraq last month, which made OPEC’s second-largest producer the top crude supplier to the Asian economy, data from Thomson Reuters has shown. Previously, Saudi Arabia was the largest oil exporter to India.
What’s more, the April figures were up by a third from March, a significant increase, especially in the contest of the OPEC oil production cut deal that called for Iraq to reduce its output by 210,000 bpd.
The reason why Iraq overtook its larger neighbor was that its Basra Heavy was cheaper and that it was “good for refineries with coker units, it is also good for conventional refiners that make bitumen as that is in demand in India,” according to the chairman of Hindustan Petroleum Corp., M. K. Surana.
Iraq’s Basra Heavy traded at an average US$2.85 per barrel less than Saudi Arabia’s Arab Heavy, as the Kingdom stopped making discounts temporarily. Its exports to India averaged 750,000 bpd in April. However, Riyadh has now cut export prices for June deliveries to Asian markets.
Aramco, the state oil giant, has cut the official selling price for its flagship Arab Light crude bound for Asia for June by US$0.40 to an US$0.85-discount to the regional benchmark, Oman/Dubai average, Bloomberg reported on Monday, citing an emailed statement by Aramco. The Saudi oil company is also cutting the pricing of all its crude varieties for Asia for June, including Super Light, Extra Light, Medium, and Heavy.
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Iran also benefited from developments stemming from the November OPEC production cut deal, climbing to #3 among India’s top suppliers, to replace Venezuela and ahead of Nigeria. Russia was the #4 exporter to India in that month.
The Middle East remains the biggest source of crude for Indian refineries, accounting for more than 50 percent of exports. Another 15 percent is coming from Africa, and 13 percent is shipped from South America.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.