World’s biggest oil exporter and number one in terms oil production, Saudi Arabia, will supply Indian buyers with an additional four million barrels of crude oil in November. This has been revealed by several sources.
The extra cargoes indicate a willingness by Saudi Arabia to increase crude supply to make up the shortfall once sanctions by the United States on oil exports from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), start up on Nov. 4.
The Asian country, India, is Iran’s top oil client after China. Several refiners have also indicated they will stop taking Iranian barrels should the sanctions take effect. State-owned oil producer Saudi Aramco, partially maintained a sealed lip over the issue when sought for to clarify the issue.
Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions. Refiners in the country have placed orders to buy 9 million barrels from Iran in November.
One of the reasons for the additional demand for Saudi oil is that the crude arbitrage from the United States is shut so the Indian buyers have to turn to Middle Eastern barrels.
India, the world’s third biggest oil importer, is grappling with a combination of rising oil prices and falling local currency, which makes imports of dollar-denominated oil more expensive.
Retail prices for gasoline and diesel fuel in India are at record highs and the government has cut its excise tax on fuel to ease some of the pain for consumers.
Indian Oil Minister, Dharmendra Pradhan spoke with Saudi Energy Minister Khalid al-Falih to remind him that OPEC and other major oil producers had promised to raise their output at a meeting in June. India imports an average of 25 million barrels per month from Saudi Arabia.
It was gathered that Russia and Saudi Arabia, the world’s two biggest oil producers, struck a private deal in September to raise output to cool rising prices and had informed the United States about the decision.