Saudi Arabia and Iran are playing a game of barrels in India

New reports revealed that India received about 576,000 barrels per day (bpd) of Iranian oil in August, up about 10 percent from July, making India’s Iran oil imports surge to highest in at least 15 years.

According to India Express, India’s oil imports from Iran last month were nearly triple the 199,000 bpd taken in August a year ago.

In April-August, the first five months of India’s current fiscal year, India’s Iran oil purchases rose nearly 70 percent to 451,000 bpd over those five months from about 266,000 bpd in the same period a year ago, the data showed.

Before Tehran was hit by international sanctions over its nuclear programme, Iran used to be India’s second-biggest oil supplier – a position now held by Iraq – before sanctions aimed at Tehran’s nuclear programme began undercutting its petroleum trade, said Times of India on sept.17.

In July, Iraq overtook Saudi Arabia to become India’s top crude oil supplier while Iran has grabbed the fourth biggest exporter slot post lifting of sanctions, according to NDTV.

Iraq sold 11 million tonnes (MT) of crude oil to India during April-June, higher than 10 MT sourced from Saudi Arabia, Petroleum Minister Dharmendra Pradhan said.

While Iraq was the second biggest supplier in 2015-16, selling 36.8 MT , followed by Nigeria (23.7 MT) and Venezuela (23.6 MT), Iran was at the 6th position.

In April-June this year, India bought 5 MT of crude oil from Iran, making it the fourth largest supplier just a shade behind Venezuela which exported 5.2 MT.

Game of barrels

Oil Price website said Iran has introduced a discount on the June contract for its heavy crude going to Asia, just a few days after Saudi Arabia announced a price increase for its own June contract for the continent. With the discount, Iranian oil will be noticeably cheaper for Asian clients than both Saudi and Iraqi crude.

Iran’s strategy makes sense—lowering prices will allow it to capture more market share. Plus, Iran needs any revenues it can get its hands on, according to Oil Price website.

Meanwhile, India is set to buy 6 million barrels of Iranian crude for its strategic oil reserves as negotiations with the United Arab Emirates’s national oil company for supplies are stuck over commercial terms, Reuters said.

Also, on September 6, the Indian Union Minister Nitin Gadkari told Economic Times that India will soon stop importing petroleum products and become zero petroleum import country.