Iran Is Now Top Oil Supplier To India
Displacing Saudi Arabia from the top spot, Iran has become the largest supplier of oil to India, reported Reuters. Iran used to be among India’s top oil suppliers before, but the sanctions imposed on it by the West over its nuclear development programme crippled its exports business. Once the sanctions were lifted, in January, Iran came back in business.
Iran’s rise can be explained partly by the lowering of crude exports by Saudi Arabia, which has increased its capacity to refine oil. Reuters reports Ehsaan Ul Haq of the United Kingdom-based consultancy KBC Energy as saying:
Saudi Arabia’s refining capacity has increased over time so it is not in a position to increase its exports further, whereas Iran is better placed to raise its output and sales to India.
Another factor in higher exports to India is Iran’s price discounts as part of a larger deal. As reported earlier, India is importing six million barrels of oil from Iran to stock up its emergency oil reserves, which are being stored in vast underground caverns across the country. In October, India took in as many as two million barrels of Iranian crude for its strategic petroleum reserve stocks. This month, twice that volume is set to be shipped in.
Iran’s relationship with India with respect to crude oil supply is most natural. India is the world’s third-biggest importer of oil after all. But Iran, which enjoyed exemption from planned cuts in production earlier due to sanctions imposed on it, is set to meet with the other members of the Organization of the Petroleum Exporting Countries on 30 November. The focus of this meeting is expected to be more planned production cuts so that oil prices rise. Things might change slightly after the meeting, but how much of a change - we’ll know after the meeting is held.