Saudi, Iraq sell more oil to In­dia, el­bow out Latin Amer­ica crudes

The Pak Banker - - MARKETS/SPORTS -

In­dia's oil im­ports from Saudi Ara­bia and Iraq hit the high­est in more than a decade last month as OPEC's top pro­duc­ers gained at the ex­pense of Latin Amer­i­can crudes, a val­i­da­tion of the OPEC pol­icy of main­tain­ing out­put and fight­ing for mar­ket share.

Com­pet­i­tive prices and shorter ship­ping dis­tances are giv­ing the Middle East mem­bers of the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC) the up­per hand in In­dia, the world's third­largest crude oil im­porter.

Saudi Ara­bia was the top sup­plier to In­dia in Jan­uary, with vol­umes jump­ing 29 per­cent from the same month a year ago to nearly 940,000 bar­rels per day (bpd), ship track­ing data ob­tained from sources and data com­piled by Thom­son Reuters Oil Re­search & Fore­casts showed on Fri­day.

Just be­hind was Iraq at 930,000 bpd, up 52 per­cent from Jan­uary lev­els last year. The daily rates from both were at their high­est since at least 2001, ac­cord­ing to data avail­able on the Thom­son Reuters Eikon ter­mi­nal.

In con­trast, to­tal im­ports from Latin Amer­ica fell by a quar­ter in Jan­uary from a year ago to 706,000 bpd, the data showed.

"We are go­ing slow in the pur­chase of Latin Amer­ica oil and have raised sup­plies from the Middle East," said H. Ku­mar, man­ag­ing di­rec­tor of Man­ga­lore Re­fin­ery and Petro­chem­i­cals Ltd.

In­dian re­fin­ers say they in­creased im­ports of Middle East­ern crude af­ter Brent rose rel­a­tive to the Dubai bench­mark, mak­ing oil priced off the lat­ter more at­trac­tive. As well, on top of com­pet­i­tive monthly prices for its oil com­pared with sim­i­lar grades, Iraq pro­vides dis­counts that could amount to more than $1 a bar­rel to com­pen­sate for crude qual­ity changes, trade sources said.

"Basra Heavy is bet­ter priced com­pared to any other heavy crude. Even Basra Light is bet­ter priced com­pared to other heavy crudes," A. K. Sharma, head of fi­nance at In­dian Oil Corp said last week.

IOC buys about 300,000 bpd of Iraqi oil, in­clud­ing a re­cently signed term deal for Basra Heavy. Re­liance In­dus­tries Ltd, owner of the world's big­gest refining com­plex, has also en­tered into a long-term deal with Iraq to buy Basra Heavy, ac­cord­ing to its web­site.

In­dian re­fin­ers that have in­vested bil­lions of dol­lars in up­grad­ing their plants are scout­ing for cheaper heavy, sour grades such as those from Iraq and Iran to max­imise gross refining mar­gins.

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