The share of Middle Eastern crude oil in India’s oil imports fell to a 25-month low in May, data on tankers provided from trade sources showed, while refineries used alternatives in response to the government’s call to diversify stocks. India, the world’s third-largest oil importer, targeted refineries in March to diversify crude oil sources after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Saudi Arabia’s largest exporter, ignored New Delhi’s call to ease supply restrictions.
The third largest Asian economy imported about 4.2 million barrels of oil per day (bpd) of oil in May, slightly below the previous month, but about 31.5% more than a year earlier, the data show. The data showed that the share of the Middle East fell to 52.7%, the lowest since April 2019 and from 67.9% in April.
Imports from Saudi Arabia, India’s second-largest supplier after Iraq, fell about a quarter from a year earlier, while inventories from the United Arab Emirates, which fell 7th from 3rd place in April, fell 39% , the data showed. This comes after Indian state-owned refineries were nominated to lift less oil from Saudi Arabia in May. Lower oil purchases from the Middle East pushed OPEC’s share of Indian oil imports to a record low.
To replace Middle Eastern oil, refineries have increased imports from Latin America, the United States and the Mediterranean. Indian refineries bought more U.S. gasoline-rich oil in March, expecting a recovery in local gasoline demand to continue in the coming months, said Ehsan Ul-Haq, a leading analyst for oil research and forecasting at Refinitiv.
Strong demand for the light crude product led to an improvement of Nigeria by two degrees to become the third supplier in India in May. Private Indian refineries Reliance Industries NSE -0.92% and Nayara Energy, however, increased their purchases of Canadian heavy oil to a record 244,000 bpd, which is approximately 6% of total imports from India.
“The Indians bought Kazakh blend of CPC and Canadian oil because of attractive discounts compared to dated Brent and WTI,” Ul-Haq said. Tanker arrival data showed higher imports than preliminary government data, as cyclones along India’s coastline delayed the discharge of cargo last month.