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India wields oil 'weapon' to cut dependence on Saudi Arabia

INDIAPOSITIVE

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Oil tankers are seen parked at a yard outside a fuel depot on in Kolkata. (File photo: Reuters)

NEW DELHI: When India’s government last month asked refiners to speed up diversification and reduce dependence on the
Middle East - days after Opec+ said it would maintain production cuts - it sent a message about its clout and foreshadowed changes to the world’s energy maps.
It was a move that had been in the works for years, fuelled by repeated comments from oil minister
Dharmendra Pradhan, who in 2015 called
oil purchases a “weapon” for his country.

When the Organisation of Oil Exporting Countries and Major Producers (Opec+) extended the production cuts into April, India unsheathed that weapon. Indian refiners plan to cut imports from the Kingdom by about a quarter in May, sources told Reuters, dropping them to 10.8 million barrels from monthly average of 14.7-14.8 million barrels.
Oil secretary Tarun Kapoor, the top bureaucrat in the ministry, told Reuters that India is asking state refiners to jointly negotiate with oil producers to get better deals, but declined to comment on plans to cut Saudi imports.
“India is a big market so sellers have to be mindful of our country’s demand as well to keep the long-term relationship intact,” he said.

The Saudi state oil company Saudi Aramco and the Saudi energy ministry declined to comment.
Pradhan, who sees high oil prices as a threat to India’s recovering economy, said he was saddened by the Opec+ decision. India’s fuel import bill has rocketed, and fuel prices – inflated by government taxes imposed last year - have hit records.
The International Energy Agency forecasts India’s consumption to double and its oil import bill to nearly triple from 2019 levels to more than $250 billion by 2040.

An oil ministry official, who declined to be named because of the sensitivity of the matter, said the Opec+ cuts have created uncertainty and made it difficult for refiners to plan for procurement and price risk.
It also creates opportunities for companies in the Americas, Africa, Russia and elsewhere to fill the gap.
If India is successful, it will set an example for other countries. As buyers see more affordable choices and renewable energy becomes increasingly common, the influence of big producers like
Saudi Arabia could wane, altering geopolitics and trade routes.
India has reduced the share of crude oil imports from the Middle East in recent years:


Diversification drive
India’s oil demand has risen by 25% in the last seven years - more than any other major buyer - and the country has surpassed Japan as the world’s third-largest oil importer and consumer.
The country has already curbed its reliance on the Middle East from more than 64% of imports in 2016 to below 60% in 2019.
That trend reversed in 2020, however, when the pandemic pummelled fuel demand and forced Indian refiners to make committed oil purchases from the Middle East under term contracts, shunning spot purchases.
As India shifts gears again after Pradhan’s call for faster diversification, refineries are looking for new suppliers, the oil ministry official said.

Costly refinery upgrades that allow for the processing of cheaper, heavier oil grades have encouraged importers to seek out far-flung sources. HPCL-Mittal Energy Ltd bought the country’s first cargo from Guyana this month, and Mangalore Refinery and Petrochemicals Ltd just imported Brazilian Tupi crude for the first time.
In past years, refiners have jointly negotiated here oil deals with sanctions-hit Iran, which offered free shipping here and price discounts, and now plan to do the same with other producers.
Since the break with Saudi Arabia began, Pradhan has had meetings with United Arab Emirates’ minister of state and chief executive of Abu Dhabi National Oil Co (ADNOC), Sultan Ahmed Al Jaber, and US energy secretary Jennifer Granholm to strengthen energy partnerships.

Pradhan recently said African nations could play a central role in India’s oil diversification. The country is looking at signing long-term oil supply deal with Guyana and exploring options to raise imports from Russia, the oil ministry source said.
A separate Indian government source said the government expects Iranian sanctions to ease in three to four months, potentially offering India a cheaper alternative to Saudi oil.

Two traders agreed that Iran stood a good chance to benefit from India’s shift, as did Venezuela, Kuwait and the United States. An Indian refinery source said the US, Africa, Kazakhstan’s CPC Blend and Russian oil would probably get a look too.
Although Indian importers will scoop up increasing volumes of attractively priced global grades, most analysts expect the Middle East to remain India’s primary oil supplier, mainly because of lower shipping costs.
India’s oil ministry is working with refiners on a framework to jointly negotiate terms with suppliers.
“Buyers have alternatives in today’s market and these alternatives are going to multiply going forward,” Kapoor said. “There are so many companies in India that do buying at their own level, so these companies coming together also becomes quite a big bloc.”

On Thursday, Saudi Arabia and Opec+ agreed after discussions with US officials to ease oil curbs beginning in May.
Saudi energy minister Prince Abdulaziz bin Salman conceded that the production cuts had put state oil company Aramco “in some difficulty with some of its partners.”
The relationship

Analysts say the oil spat does not need to spill over into broader strategic ties in other sectors, including defence.
“Until recently, the balance of power was skewed towards Saudi Arabia, but increasingly, India is using access to its market and the diversity of options to put pressure on Saudi Arabia,” consultancy Eurasia said in a note. “For Saudi Arabia, losing market share in a global environment in which most developed economies are already seeing their oil demand decline due to green policy implementation, would be a blow.”

Abdulaziz confirmed that Aramco had maintained normal April oil supplies to Indian refiners while cutting volumes for other buyers - a sign Saudi Arabia is concerned about India’s search for new sources.
Saudi Arabia is India’s fourth-biggest trade partner, importing a slew of items, including food. Saudi Armaco is looking at buying a 20% stake in
Reliance Industries’ oil and chemicals business. It is also a part of a joint venture to build a 1.2 million barrels per day refinery in India.


 

The Maverick

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India increasingly flexing its economic might
this is good following on from.eyeballing China,down in ladakh
I like it
meek mild India not pushing it's weight is over
telling usa,to forget blackmail.s400 deal too this,is,excellent stuff
 

Irfan Baloch

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Oil tankers are seen parked at a yard outside a fuel depot on in Kolkata. (File photo: Reuters)

NEW DELHI: When India’s government last month asked refiners to speed up diversification and reduce dependence on the
Middle East - days after Opec+ said it would maintain production cuts - it sent a message about its clout and foreshadowed changes to the world’s energy maps.
It was a move that had been in the works for years, fuelled by repeated comments from oil minister
Dharmendra Pradhan, who in 2015 called
oil purchases a “weapon” for his country.

When the Organisation of Oil Exporting Countries and Major Producers (Opec+) extended the production cuts into April, India unsheathed that weapon. Indian refiners plan to cut imports from the Kingdom by about a quarter in May, sources told Reuters, dropping them to 10.8 million barrels from monthly average of 14.7-14.8 million barrels.
Oil secretary Tarun Kapoor, the top bureaucrat in the ministry, told Reuters that India is asking state refiners to jointly negotiate with oil producers to get better deals, but declined to comment on plans to cut Saudi imports.
“India is a big market so sellers have to be mindful of our country’s demand as well to keep the long-term relationship intact,” he said.

The Saudi state oil company Saudi Aramco and the Saudi energy ministry declined to comment.
Pradhan, who sees high oil prices as a threat to India’s recovering economy, said he was saddened by the Opec+ decision. India’s fuel import bill has rocketed, and fuel prices – inflated by government taxes imposed last year - have hit records.
The International Energy Agency forecasts India’s consumption to double and its oil import bill to nearly triple from 2019 levels to more than $250 billion by 2040.

An oil ministry official, who declined to be named because of the sensitivity of the matter, said the Opec+ cuts have created uncertainty and made it difficult for refiners to plan for procurement and price risk.
It also creates opportunities for companies in the Americas, Africa, Russia and elsewhere to fill the gap.
If India is successful, it will set an example for other countries. As buyers see more affordable choices and renewable energy becomes increasingly common, the influence of big producers like
Saudi Arabia could wane, altering geopolitics and trade routes.
India has reduced the share of crude oil imports from the Middle East in recent years:


Diversification drive
India’s oil demand has risen by 25% in the last seven years - more than any other major buyer - and the country has surpassed Japan as the world’s third-largest oil importer and consumer.
The country has already curbed its reliance on the Middle East from more than 64% of imports in 2016 to below 60% in 2019.
That trend reversed in 2020, however, when the pandemic pummelled fuel demand and forced Indian refiners to make committed oil purchases from the Middle East under term contracts, shunning spot purchases.
As India shifts gears again after Pradhan’s call for faster diversification, refineries are looking for new suppliers, the oil ministry official said.

Costly refinery upgrades that allow for the processing of cheaper, heavier oil grades have encouraged importers to seek out far-flung sources. HPCL-Mittal Energy Ltd bought the country’s first cargo from Guyana this month, and Mangalore Refinery and Petrochemicals Ltd just imported Brazilian Tupi crude for the first time.
In past years, refiners have jointly negotiated here oil deals with sanctions-hit Iran, which offered free shipping here and price discounts, and now plan to do the same with other producers.
Since the break with Saudi Arabia began, Pradhan has had meetings with United Arab Emirates’ minister of state and chief executive of Abu Dhabi National Oil Co (ADNOC), Sultan Ahmed Al Jaber, and US energy secretary Jennifer Granholm to strengthen energy partnerships.

Pradhan recently said African nations could play a central role in India’s oil diversification. The country is looking at signing long-term oil supply deal with Guyana and exploring options to raise imports from Russia, the oil ministry source said.
A separate Indian government source said the government expects Iranian sanctions to ease in three to four months, potentially offering India a cheaper alternative to Saudi oil.

Two traders agreed that Iran stood a good chance to benefit from India’s shift, as did Venezuela, Kuwait and the United States. An Indian refinery source said the US, Africa, Kazakhstan’s CPC Blend and Russian oil would probably get a look too.
Although Indian importers will scoop up increasing volumes of attractively priced global grades, most analysts expect the Middle East to remain India’s primary oil supplier, mainly because of lower shipping costs.
India’s oil ministry is working with refiners on a framework to jointly negotiate terms with suppliers.
“Buyers have alternatives in today’s market and these alternatives are going to multiply going forward,” Kapoor said. “There are so many companies in India that do buying at their own level, so these companies coming together also becomes quite a big bloc.”

On Thursday, Saudi Arabia and Opec+ agreed after discussions with US officials to ease oil curbs beginning in May.
Saudi energy minister Prince Abdulaziz bin Salman conceded that the production cuts had put state oil company Aramco “in some difficulty with some of its partners.”
The relationship

Analysts say the oil spat does not need to spill over into broader strategic ties in other sectors, including defence.
“Until recently, the balance of power was skewed towards Saudi Arabia, but increasingly, India is using access to its market and the diversity of options to put pressure on Saudi Arabia,” consultancy Eurasia said in a note. “For Saudi Arabia, losing market share in a global environment in which most developed economies are already seeing their oil demand decline due to green policy implementation, would be a blow.”

Abdulaziz confirmed that Aramco had maintained normal April oil supplies to Indian refiners while cutting volumes for other buyers - a sign Saudi Arabia is concerned about India’s search for new sources.
Saudi Arabia is India’s fourth-biggest trade partner, importing a slew of items, including food. Saudi Armaco is looking at buying a 20% stake in
Reliance Industries’ oil and chemicals business. It is also a part of a joint venture to build a 1.2 million barrels per day refinery in India.


bad move by India.
dont come in the crosshair of the crown prince.

he doesn't take prisoners.

Saudis have much more clout than Indians beyond the monetary denominations.

Prince Suleman has just added India to the naughty list
 

Protest_again

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bad move by India.
dont come in the crosshair of the crown prince.

he doesn't take prisoners.

Saudis have much more clout than Indians beyond the monetary denominations.

Prince Suleman has just added India to the naughty list
He can bully small countries like Pakistan. But with India, which is his third largest oil buyer, he'll tread carefully. But let's just wait and see.
 

rent4country

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bad move by India.
dont come in the crosshair of the crown prince.

he doesn't take prisoners.

Saudis have much more clout than Indians beyond the monetary denominations.

Prince Suleman has just added India to the naughty list
Did you read the article?

There are several countries that export oil. India is asking that their refineries in India that buy oil _ collectively bargain and diversify from buying heavily from OPEC, specifically from major players in OPEC like the Middle East countries, to rather purchase from Africa and others.

Thus forcing OPEC countries to quit playing games of limiting productions at their whim, if they want large buyers like India to keep purchasing 'large amounts and most' of their oil needs from the Middle east.

This is a great undertaking by India & for not only India but even smaller countries like Pakistan that are held to ransom on oil prices by OPEC countries too. If they force OPEC to stop playing games to a certain extent, prices don't go up on artificial whims so often and that helps other countries too.
 

Irfan Baloch

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Did you read the article?

There are several countries that export oil. India is asking that their refineries in India that buy oil _ collectively bargain and diversify from buying heavily from OPEC, specifically from major players in OPEC like the Middle East countries, to rather purchase from Africa and others.

Thus forcing OPEC countries to quit playing games of limiting productions at their whim, if they want large buyers like India to keep purchasing 'large amounts and most' of their oil needs from the Middle east.

This is a great undertaking by India & for not only India but even smaller countries like Pakistan that are held to ransom on oil prices by OPEC countries too. If they force OPEC to stop playing games to a certain extent, prices don't go up on artificial whims so often and that helps other countries too.
very cute response but
did you read my comment?

Prince Soleman is not amused. this smart *** Coy move by India dubbed "oil weapon" wont go well with the Kingdom .
the motive or excuse behind the move is a veiled threat and a taunt by Indians because they think Saudis live on their purchases.
the Kingdom has just dealt with USA and Turkey on the matter of a slain journalist. all the hot air has been exhausted already.
eat all the daal and cabbage you can muster and make some smell for all your Indian worth.
KSA wont flinch.
 

Irfan Baloch

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He can bully small countries like Pakistan. But with India, which is his third largest oil buyer, he'll tread carefully. But let's just wait and see.
he just dealt with America and Turkey together on the matter of brutal assassination of Jamal Khashoggi he witnessed via live feed and shrugged away their hot air reactions.
both of these countries dont fall under the banner of "small" definition.

eat some meat based protein diet it will really help you to get your paranoia over "small" countries like Pakistan and you will be able to perform like a warrior with powers of equal or higher magnitude.
 

hussain0216

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India increasingly flexing its economic might
this is good following on from.eyeballing China,down in ladakh
I like it
meek mild India not pushing it's weight is over
telling usa,to forget blackmail.s400 deal too this,is,excellent stuff
Yaar bas Kar, India was humilated

Just trying to bullshit out of it just makes you Indians look delusional fools
 

rent4country

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very cute response but
did you read my comment?

Prince Soleman is not amused. this smart *** Coy move by India dubbed "oil weapon" wont go well with the Kingdom .
the motive or excuse behind the move is a veiled threat and a taunt by Indians because they think Saudis live on their purchases.
the Kingdom has just dealt with USA and Turkey on the matter of a slain journalist. all the hot air has been exhausted already.
eat all the daal and cabbage you can muster and make some smell for all your Indian worth.
KSA wont flinch.
what ??? where did you get this take coming from the kingdom? did we miss some response you have read somewhere?

This is a simple supply and demand economics play...played by every country when it comes to their purchasing power. This has nothing to do with Khashoggi or human rights or taunting of anyone. It's pure economics play, good for everyone if it gets OPEC nations to stop playing games with oil prices on a whim.

I like it because it will increase their purchasing from the US if you noticed the two charts.
 
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Windjammer

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India increasingly flexing its economic might
this is good following on from.eyeballing China,down in ladakh
I like it
meek mild India not pushing it's weight is over
telling usa,to forget blackmail.s400 deal too this,is,excellent stuff
Better bring back your empty stomach warriors to lighten the load on the poor kingdom , feed them and then gift them with India's new found oil fortunes.

450 jobless Indian workers forced to beg in Saudi, shifted to detention centres.

Read more at:
http://timesofindia.indiatimes.com/...ofinterest&utm_medium=text&utm_campaign=cppst
 

pakpride00090

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bad move by India.
dont come in the crosshair of the crown prince.

he doesn't take prisoners.

Saudis have much more clout than Indians beyond the monetary denominations.

Prince Suleman has just added India to the naughty list
Sorry to say but harsh measures are only for us or a weak muslim state.

I don't think they will do much against india or its citizens in KSA... History is a proof of that.

They were one of the reasons we were graylisted , block OIC meetings on Kashmir, refused to intervene and help in Kashmir thoroughly and threated to kick out all pakistanis from KSA when IMmi wanted to create a new bloc

Can you name any single harsh measures against Indians ?
he just dealt with America and Turkey together on the matter of brutal assassination of Jamal Khashoggi he witnessed via live feed and shrugged away their hot air reactions.
both of these countries dont fall under the banner of "small" definition.

eat some meat based protein diet it will really help you to get your paranoia over "small" countries like Pakistan and you will be able to perform like a warrior with powers of equal or higher magnitude.
No one cares about Kashoggi .. These are all optics to create moral image.
 

Protest_again

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he just dealt with America and Turkey together on the matter of brutal assassination of Jamal Khashoggi he witnessed via live feed and shrugged away their hot air reactions.
both of these countries dont fall under the banner of "small" definition.

eat some meat based protein diet it will really help you to get your paranoia over "small" countries like Pakistan and you will be able to perform like a warrior with powers of equal or higher magnitude.
Lol. He can murder Kagoshhi or anyone else of his country. How does it matter to USA or Turkey? Well let him try to kill an American and shrug it off. Sometimes keeping quiet is a sign of smartness.
 

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