New Delhi, March 17 : The US has becomes the biggest gainer of its decision to impose sanctions on oil producing countries Iran and Venezuela.
America has steadily improved its exports post sanctions and has now become second biggest oil supplier to India, the worlds third largest oil consumer.
As per trade data, US supplied almost 2.2 million tonne (mt) of oil to India in February, higher than even Saudi Arabia, which had traditionally been among the biggest exporters of oil to India. This is 48 per cent growth in US oil exports to India and is accounting for almost 14 per cent of India’s total oil imports in February.
Surprisingly, the Saudis supplied about 1.8 mt of oil to India in February, a fall of over 40 per cent, that pushed it to number four position among countries meeting energy demand of the worlds third largest oil importer.
Sources said US sanctions have lifted oil trade of US as it is quickly occupying the space vacated by Iran that has been among India’s top three oil suppliers in the past.
Before sanctions reduced Iranian oil supplies to almost zero level in FY21, the Islamic nation used to export over 20 mt of oil to India, accounting for over 10 per cent of country’s total oil imports.
In 2017-18, the imports from Iran were seen at 22.6 mt, while it dipped from 23.9 mt to 1.7 mt respectively in 2018-19 and 2019-20. During the same period, crude oil imports from the US increased to 1.9 mt in 2017-18, 6.2 mt in 2018-19, and 10.3 mt in 2019-20, based on petroleum ministry data.
This year (FY21) upto February, imports from US has already increased to its highest ever level of about 13 mt and May end the year with 15 mt of oil imports. India imports over 200 mt of oil per year and meet 85 per cent of domestic oil needs through shipping channels.
In 2020-21 April-December, US was the fourth largest supplier ($4.9 billion) after Iraq ($9.4 billion), Saudi Arabia ($8.9 billion) and UAE ($7.4 billion)
India began imports of oil from US in 2017.
For US the trade dispute with China has meant exploring nearer market for its surplus oil which this year had become very distinct with lower demand in the domestic market. India has provided the right market in this environment to push oil sales.
“Indian refiner are preferring to go for cheaper US crude purchases as it helps them offset supply cuts announced by OPEC + and unilateral 1 million barrel per day production cut by Saudi Arabia. India has been pushing OPEC to increase production and help tame rising crude prices that goes against the interest of prime oil.
Importing country. In the meanwhile, US oil has become attractive with widening divide between WTI and Brent crude. Softer freight cost has also helped here,” said an oil sector analyst not willing to be named.
As per industry sources, the February oil trade has thrown up few surprises. Apart from US that has become the second largest oil exporter to India and Iraq retaining the numero uno slot with exports of 3.6 mt of crude, the position have changed further in the list of prime oil exporters to India.
African country Nigeria has become the third biggest oil exporter to India in February with exports of about 2 mt of crude. This has pushed UAE further down to fifth position with crude export of about 1.5 mt in February. India imported close to 16 mt of crude during the month.
India has been diversifying its crude import basket by increasing the sourcing countries and geographies. This has become even clearer with February import data as share of Middle East in India’s overall imports has plunged to nearly two year low levels while the share of Africa’s rose to 15 per cent, the highest since September.
Venezuela which is also under US sanctions was also a big oil supplier to India, mainly to some of the private sector companies. But its supplies also faltered this year with crude exports worth just $636 million in the first eight months of this financial year after $6 billion in 2019-20.
Imports of crude oil from Mexico, Brazil, Colombia and Ecuador have also declined significantly in 2020-21.