OPEC CUTS, VIRUS HAS INDIA EYING PROMPT IMPORTS OF LIGHT OIL

India’s refiners are turning to spot oil from Africa and North America as long-term suppliers in West Asia cut output and as demand for gasoline jumps amid the Covid-19 pandemic.

Spot crude imports into the world’s third-largest oil market will rise by 10% to 15% this year from 2020, according to industry consultant FGE. The increased purchases are coming as India’s top suppliers, including Saudi Arabia and Iraq, curtail output as part of the Opec+ pact.

The shift underscores how other producers are benefiting from the cuts as consumption returns in markets like India. It’s been especially good to exporters like the US and Nigeria, whose crude produces more gasoline that’s in high demand as the pandemic pushes people to private cars instead of public transport.

“The pullback from traditional term suppliers came when refiners maximized throughput to align with the robust domestic demand recovery,” said Senthil Kumaran, FGE’s head of South Asia oil. “They were forced to scramble for spot supplies to bridge the shortfall.”

Bharat Petroleum Corp., India’s second biggest stateowned refiner, has increased the proportion of spot crude purchases to about 45% from about 30% normally, according to finance director N. Vijayagopal. The company plans to keep spot about 40% of supply in at least the medium term. “We are trying to increase the proportion of spot in the overall basket,” Vijayagopal said.

BPCL boosted refinery runs to 113% in January, and the other major state-owned refiners, Indian Oil Corp. and Hindustan Petroleum Corp. are also operating above capacity, company officials said. While demand for gasoline and liquid petroleum gas for cooking has surged, diesel’s rebound has been slower and jet fuel consumption is still half of what it was a year ago as most international routes remain shut.

That’s leading to a shift in where India is sourcing its barrels.

West Asia oil tends to yield more diesel, while crude from the North Sea, West Africa and US shale fields usually produce more LPG and gasoline. Crude imports from Nigeria in December jumped 68% from the previous year, while US oil purchases surged almost 77%, according to government data.