Iraq, not Saudi biggest oil exporter to India

The Dollar Business Bureau

Iraq has become the largest oil exporter to India surpassing Saudi Arabia. In the month of April, 22% of the Indian oil imports were from Iraq, while 18 % of oil was imported from Saudi Arabia. During the same month previous year, 25% of oil imports to the country were from Saudi Arabia while 15% were from Iraq.

According to A K Sharma, Head of Finance at Indian Oil Corp, the oil imported from Iraq is cheaper and a better alternative than the Saudi Arabian oil. This is mainly because of the better prices offered by Iraq. There is a huge variation in the prices of both the countries. Iraq has continuously maintained its official selling price (OSP) lower than Saudi Arabia’s, he said.

Last month, Iraq had offered a discount of $2.60 a barrel while fixing the OSP for Basrah Light crude. This is comparatively lower than the Middle East benchmarks. This price is 20 cents less than the OSP for the same crude grade Arab Medium, he informed.

The overall demand for crude oil in India has increased in 2016 as most of the refiners avoid maintenance shutdown in the Q1 of FY 2016 to meet the yearly target of crude processing. The country's biggest oil refiner Indian Oil Corp also enhanced its imports after the commissioning of 300,000-bpd refinery at Paradip.

Another important oil exporter Iran has increased its share in Indian imports to 9% in April when compared to about 7.2% in the same month previous year. During January-April 2016, India imported 7.4 % oil from Iran while it was only 4 % in the corresponding period last year. With this, Iran has become the fifth-largest oil exporter to India in 2016, against the eighth position in the previous year.

The exporters from Latin America have supplied 8.2% less crude oil to India in January-April this year. The Latin American share in Indian imports has declined from 19% to 16% over a period of one year. The region has lost its share in the Indian market mainly due to its uncompetitive oil prices when compared to that of the gulf nations.