Iraq has overtaken Saudi Arabia to become India’s top crude oil supplier by supplying 38.9 million tonnes (MT) crude oil in the current financial year. It was fifth of the India’s oil needs.
India is 80% dependent on imports to meet its oil needs. India had imported 184.4 MT of crude oil during April-January period of 2017-18 period as compared to 213.9 MT in the entire 2016-17 fiscal, and 202.8 MT in 2015-16.
Saudi Arabia traditionally has been India’s top oil source but Iraq dethroned it. Saudi Arabia supplied 30.9 MT of crude oil in first 10 months of current fiscal. Iran continued to be third largest supplier, selling 18.4 MT during April-January. This is the second year in a row that Iran has occupied the third position. Venezuela is India’s fourth largest supplier with 15.5 MT during April-January, followed by Nigeria with 14.9 MT.
Imports from West Asia
India’s dependence on West Asia for its crude oil needed has increased from 58% in 2014-15 to 63.7% in April-January period of this fiscal. India had imported 109.9 MT out of 189.4 MT of total crude imports in 2014-15 from region. In the current fiscal so far, West Asia has accounted for 117.5 MT of crude oil supplies to India.
Reasons for increase of imports from Iraq
Iraq was able dethrone Saudi Arabia as India’s largest crude oil supplier mainly by supplying heavily discounted crude compared to crude oil sold by Saudi Arabia at Official Selling Price of OPEC. In given time period, prices of crude oil had shot up following production cuts by OPEC members. However, Iraq did not followed the aggressive pricing due to its heavy dependence on oil revenues to fund its economy. Moreover, Indian refiners in recent years have invested heavily in modernising plants to more efficiently process low grade crudes including Basra heavy crude from Iraq, giving greater flexibility in the cost-saving oil grades they can buy.