India's crude oil imports from UAE surge: Here's why
India has experienced a significant surge in crude oil imports from the United Arab Emirates (UAE). This is because discounts on Russian oil supplies have shrunk and production cuts from Saudi Arabia have taken effect. Last month, India imported 303,000 barrels per day (bpd) of crude oil from the UAE. This marked a 35.26% increase from the earlier month, according to data from energy cargo tracker Vortexa.
Payment issues with Russian oil
This rise in crude imports from the UAE comes as Indian refiners face payment-related challenges when purchasing Russian oil, leading them to turn back to traditional Middle-East suppliers. Hitesh Jain, Lead Analyst at Yes Securities, states that the US is enforcing strict surveillance "in terms of a fleet of shipping companies that are trying to ship Russian oil to India and other markets." This has made it difficult for Indian refiners to get Russian oil.
UAE's high output and production capacity
Despite supply restrictions from OPEC, the UAE is maintaining high output levels. Jain further explained that "going forward, countries such as UAE and Iraq are ideal for India and import from these countries should go up." Prashant Vasisht, VP and Co-Head of Corporate Ratings at ICRA, points out that "UAE is increasing its production capacities as the country has been looking at increasing its crude oil sales." This could be a significant reason for higher imports from the UAE.
Shift in India's crude oil suppliers
Before the Russia-Ukraine war in 2022, India's primary crude oil suppliers were Iraq, Saudi Arabia, and the UAE. However, Russia became the largest supplier after the war, redirecting its oil to Asian countries like China and India at discounted prices due to sanctions imposed by the EU and US. With diminishing discounts from Moscow and surpassing price caps, India's crude imports from Russia fell for the second consecutive month in November, dropping 4% from the previous month.
