India’s imports of oil from Iraq surged in January to a 29-month high of about 1.3 million barrels per day (bpd), making up nearly a third of the supplies to Asia’s third-largest economy, data from shipping and industry sources show.
Iraq’s importance as a key supplier is set to grow this year as at least two Indian refiners have increased their annual oil import deals with the second-biggest OPEC producer.
India imported 4.6 million bpd of oil in January, a decline of about 1% from the previous month and about 3 percent from the year-earlier, data compiled by Reuters showed. Imports from Iraq were the highest since Aug. 2019.
From April 2021 through January 2022, the first 10 months of this fiscal year, India, the world’s third-biggest oil importer and consumer, shipped in 4.2 million bpd of oil, up 6.5 percent from a year ago, as refiners raised runs to meet rising fuel demand.
India’s oil imports in February and March could rise as state refiners, which make up 60% of its total capacity of 5 million bpd, traditionally raise runs in the final fiscal quarter to meet production targets set by the government.
Indian refiners buy medium to heavy grades from the Middle East under annual deals at official selling prices (OSPs) and rely on the spot market for most of their requirements for sweet light oil, mainly from West Africa.
Brent crude’s premium to Dubai swaps, or the spread between low- and high-sulfur crude, averaged $4.58 a barrel in November, said Refinitiv analyst Ehsan Ul Haq.
”That forced Indians to buy Middle Eastern grades, and OSPs for Iraqi grades for Asia were better than for rival similar oil from Saudi Arabia and Kuwait,” Haq said.
India’s imports of Nigerian oil declined to about 187,000 bpd, their lowest since July 2020, the data showed.
The higher Iraq imports pulled up OPEC’s share of Indian oil imports to 74 percent in January from 72.5 percent in December and 68.6 percent a year earlier, the data showed. However, on a fiscal year basis, OPEC’s share plunged to the lowest.
During January, Iraq continued to be the top oil supplier to India, followed by Saudi Arabia, the United Arab Emirates, the United States, and Nigeria.
Canada emerged as India’s sixth-largest supplier, improving its ranking by 7 notches from last month and by three from a year earlier, the data showed.
Latin America’s share of India’s January imports fell to six-month lows on a lower intake of Mexican oil, the data showed. Mexico has told its Indian customers of planned cuts in term supplies in 2022.