New Delhi, In a strategic move prompted by evolving global circumstances, India has significantly boosted its crude oil imports from the United Arab Emirates (UAE) in recent months. This surge comes in the wake of diminishing discounts on Russian crude oil and production cuts from Saudi Arabia.
According to data from energy cargo tracker Vortexa, India imported 303,000 barrels per day (bpd) of crude oil from the UAE in November, marking a substantial 35.26% increase from the previous month. Similarly, October witnessed a 61% surge in imports from the UAE compared to September, reaching 224,000 bpd.
The heightened reliance on UAE as a crude oil supplier is attributed to challenges faced by Indian refiners in procuring Russian oil amid stricter U.S. surveillance on shipping companies involved in Russian oil trade. This shift, as explained by Hitesh Jain, Lead Analyst at Yes Securities, is part of Indian refiners turning back to traditional Middle-East suppliers.
Despite OPEC’s recent production cuts, the UAE has maintained high output, positioning itself as a reliable source for India. Prashant Vasisht, VP & Co-Head, Corporate Ratings at ICRA, suggests that the UAE’s focus on increasing crude oil sales has contributed to India’s increased imports, although without additional discounts.
The broader context includes OPEC+ agreeing to voluntary production cuts of nearly 1 million bpd by early 2024. However, UAE, as an OPEC member, stands out by actively increasing its production capacities.
In November, India also witnessed a surge in crude oil imports from Iraq, totaling 1.03 million bpd, constituting 23% of the country’s total oil imports for the month.
This strategic shift in oil imports marks a departure from the post-war scenario when Russia emerged as India’s largest crude oil supplier, surpassing traditional Middle-Eastern suppliers. However, declining discounts and rising costs of Russian oil have led to a consecutive decline in India’s crude oil imports from Russia for the second month in a row.
As India navigates the complex global energy landscape, its recalibration of crude oil sources reflects the delicate balance between geopolitical dynamics and economic considerations.
