New Delhi, May 17: Iraq has become India’s leading crude oil supplier replacing Saudi Arabia in the month of April this year. Notably, Iraq replaced Saudi in crude oil export in India as refiners moved to boost their processing margins by purchasing the cheaper Basra Heavy oil grade, ship tracking.
According to the Thomson Reuters trade flow data, India in the month of April topped 1 million barrels per day (BPD) for the first time, up by about a third from March and 8% from a year ago. M. K. Surana, chairman of Hindustan Petroleum Corp said, "Basra heavy is good for refineries with coker units, it is also good for conventional refiners that make bitumen as that is in demand in India. Also (the crude) is available at discounts so it is value for every dollar that we spend."
Interestingly, Indian refiners recently invested heavily in modernizing companies to more efficiently process low-grade crudes into diesel and gasoline which helps to boost operating margins and giving greater flexibility in the oil grades they can buy. Therefore, the demand for crude oil in India is increased which is further boosting nation’s economy.
Importantly, India purchases crude oil from several countries in which Middle-East has the biggest share. India purchases 15% oil from Africa, nearly 13% from Latin America and rest coming from the Middle East. Usually, Saudi Arabia is India’s main crude oil supplier exported of about 5% less crude oil in the month of April.
With each barrel of Iraq's Basra Heavy oil trading at roughly $2.85 less than a barrel of Saudi Arabia's Arab Heavy mix when the deals were done, Indian importers were able to realize a substantial cost saving by making the switch, without much impact on product output. India's lower Saudi purchases were partly due to firmer Saudi prices following the production cuts by the Organization of the Petroleum Exporting Countries (OPEC) since January.
Whereas Iraq is OPEC's second-largest producer after Saudi Arabia, but in the month of April gained the first spot. Iran emerged as the third-biggest oil supplier to India in April, replacing Venezuela, which slipped to the fifth spot, behind Nigeria. Earlier, in the year 2016, Iran overtook political rival Saudi Arabia as India's top oil supplier in October. Iran used to be India's second-biggest oil supplier.