Saudi Oil Output Cut Unlikely To Hurt India As Russia Leaps Ahead
Oil from Russia accounted for 42% of the total oil imports in May.
Saudi Arabia's decision to further cut crude output is unlikely to hurt India as Russia, with its discounted oil, has trumped all other nations to emerge the largest supplier with 42% share in India's fuel imports.
The cheap Russian supply in May scaled another record and is now more than the combined oil bought from Saudi Arabia, Iraq, UAE and the U.S., PTI reported citing data from energy cargo tracker Vortexa. India took 1.96 million barrels a day from Russia in May, 15% higher than April.
The additional supply cut of one-million barrels a day from July by Saudi Arabia will not lead to any substantial impact as India has an extraordinarily good pricing deal from Russia, according to Ashwin Jacob, partner Deloitte India. "The price increase in coming months will be compensated by the Russian discounts to large extent." The impact on India will be minimal," Jacob said.
In FY23, barring Russia, crude imports from all other geographies including Saudi Arabia, Iraq, UAE, US, and others countries, fell.
"In 2022-23, there was a change in the sources of India’s crude imports. Russia’s share in India’s crude imports soared to 19.1 per cent from 2.0 per cent a year ago," the Reserve Bank of India said in its FY23 annual report.
India imported 232.73 million tonnes of crude in FY23, an increase of 9.58% year-on-year, according to Petroleum Planning & Analysis data.
The increase in value terms was 37% year-on-year to $157 billion. According to Director General of Commercial Intelligence and Statistics, India imported Petroleum Crude worth $162.2 billion and petroleum products worth $47.21 billion in FY23. It exported petroleum products worth $97.4 billion in FY23.
Kotak Securities, in a report said, markets are likely to tilt into a deficit in the second half of 2023, if Chinese demand recovery materialises. "With rising odds of a Federal Reseve pause in June coupled with tightening supplies, we might see oil prices trading with an upside momentum."