Iraq leads with discounts as West Asia retains top spot in Indian oil market

West Asian crude suppliers are returning to the Indian oil market, fending off Russia’s attempts to rely on deep discounts and going so far as to offer lower rates even to Russian supplies at reduced prices.

Iraq, India’s biggest crude oil supplier, maintained its lead over Russia in August, supplying India 12-20% more in the first 30 days of the month, according to two major agencies intelligence on data that estimates crude oil shipments by tracking tanker movements. .

Iraq supplied about 895,000 barrels per day (bpd) of crude to India as of August 30, compared to 748,000 bpd for Russia and 768,000 bpd for Saudi Arabia, according to Kpler, based in Paris. This compares to Iraqi shipments of 965,000 bpd in July, 868,000 bpd from Russia and 811,000 bpd from Saudi Arabia.

London-based data analytics provider Vortexa pegs Indian imports of Iraqi crude in August at 860,000 bpd, 90,000 bpd higher than Russia’s 770,000 bpd. Saudi Arabia shipped 820,000 bpd in August. Vortexa includes Urals, ESPO and other Russian ranks in its numbers. This compares to Iraqi supplies of 1.02 million bpd in July, followed by Russian and Saudi shipments of 860,000 bpd each.

“Iraq and Saudi Arabia want to protect their territory. Iraq offered barrels at a discount, and that may have led Indian refiners to turn away from Russian barrels,” said Rohit Rathod, principal analyst at Vortexa.

India needed less crude in August as major refinery shutdowns reduced the need for Russian spot shipments, industry officials said. “It’s a reflection of generally weaker crude demand from India that flows are falling for all three,” said Kpler analyst Matt Smith.

Iraq undermined Russia in June by supplying a range of crudes that cost an average of $9 a barrel less than Russian oil, according to Indian Customs data.

Data from Indian Customs tends to differ from information provided by foreign data agencies, as Customs calculates volumes every month based on delivered shipments.

“Russian crude oil prices have risen due to robust demand, and it is less discounted,” said Tilak Doshi, an industry expert with more than 30 years of oil and gas experience, including senior positions at Saudi Aramco and KAPSARC. Russian crude is being redirected east as Western sanctions are gradually imposed, with the European Union planning new sanctions from December to ban imports of Russian crude, he added.

Although Iraq has resorted to discounts and offered a wider range of crudes to Indian refiners to maintain its dominance in the Indian oil market, Saudi Arabia has been more conservative, industry officials said.

Iraq has succeeded in increasing the availability of Basrah Medium, a viable Ural substitute, and Basrah Heavy, relatively cheaper than Basrah Light, which are suitable for India’s modernized factories, keeping overall costs lower , said an official at a state refiner.

Medium Sour Ural from Russia, similar to some West Asian grades such as Middle Arabian, is also suitable for refiners when available at a discount, but availability of the grade has been an issue in the past as the Europe and China consumed most of Russia’s oil.

India typically buys most of its crude through futures contracts from West Asian suppliers led by Iraq and Saudi Arabia, and Russian spot crude, made up of Urals and ESPO blends, has largely displaced the qualities of the United States, United Arab Emirates, Mexico and the West. Africa.

Iraq increased its share in June to 26% of total Indian crude imports from 24% in May after its supply cost averaged $93 a barrel, compared to $102 a barrel for Russian crude and $116 a barrel for the Indian crude basket. , a national index that tracks major crudes from India. Iraq supplied 1.39 million barrels per day in June, 26% more than in May, compared to 986,000 barrels per day of Russian supply in June.

The share of Russian exports in India’s overall crude purchases more than doubled, from 8% in April to 18% in June. In terms of volume, this translated to nearly one million barrels per day of Russian oil in June. Before war broke out in Ukraine in February, Russian supplies made up less than 1% of India’s total imports, averaging around 40,000 barrels a day in January-February.