Last month, India asked refiners to speed up diversification and reduce dependence on the Middle East — days after the Organisation of Oil Exporting Countries and Major Producers (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 Indian Oil Minister Dharmendra Pradhan, who in 2015 called oil purchases a “weapon” for his country.
When Opec+ extended the production cuts into April, India unsheathed that weapon. Indian refiners plan to cut imports from Saudi Arabia by about a quarter in May, sources told Reuters, dropping them to 10.8 million barrels from a monthly average of 14.7-14.8m barrels.
Oil secretary Tarun Kapoor, the top bureaucrat in the ministry, told Reuters that India was 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.
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.