Middle Eastern oil producers, including Iraq and Saudi Arabia, may not be able to help meet the demand for Indian crude oil in the coming months if the US sanctions on Russia have an impact on the main supply of children.
Gurmeet Singh, Director General of the Indian Oil Industry Federation, said the country had developed a strategy to replace Russian barrels, which might include increasing imports from Iraq, Saudi Arabia and the US, depending on the developing geopolitical landscape.
An official at Iraqi State Oil Marketer Somo told S&P Global Commodity Insights that the allocation of regional crude oil for 2025 was determined, and spot cargo was rarely available, showing that the second largest manufacturer OPEC might not be able to overcome supply gaps in India.
The supply of Saudi crude oil also looks tight, and with the March load is completed, India needs to wait until at least April to take Saudi crude oil.
The grace period in the Sanction Regime of the Foreign Asset Control Office of the US Ministry of Finance allows the ship that is loaded before January 10 to be dismantled until February 27, so that the impact of sanctions is expected to be felt afterwards.
While OPEC has maintained current production cuts, they are expected to immediately ease, potentially increasing the rough volume available in the market. However, Saudi Arabia and Iraq have allocated an increase of 56,000 B/D and 12,000 B/D, each, in April is simple, and the policy to alleviate cutting can change depending on market conditions.
“My feeling is that there will be no extra direct volume for India [from Saudi Arabia]”Said a market analyst based in the Middle East.
The Saudi oil Ministry did not respond to requests for comments.
The production of Iraq and Saudi Arabia is limited by their OPEC+ commitment, and Iraq regularly fails to comply with the quota. Iraq pumps 4.06 million b/d in January, down from the previous month but still exceeds a quota of 60,000 b/d. Meanwhile, Saudi Arabia is produced right below the target of 8,978 million b/d at 8.97 million b/d, according to the latest OPEC+ platts survey from commodity insight.
The US and the United Kingdom imposed fresh sanctions in the Russian energy sector January 10, including sidewalks in two Russian oil producers, Gazprom NEFT and Surgutneftas. The actual impact of sanctions has not been seen, with some analysts say the real effect will be minimal.
Russia supplies around 35% of Indian crude oil in 2024, according to the S&P Global Commodities at Sea (opened in a new tab). The Middle East and Russia contributed nearly 80% of Indian oil imports. Iraq and Saudi Arabia are the second and third largest suppliers of crude oil to India, right in front of the UAE and the US.
In January, 1.2 million b/d crude sour source source Russia arrived in India, according to CAS data. On February 12, CAS showed 490,000 b/d urral sent to India for the month.
Source: Platts
