India’s imports of spot crude cargoes from producers such as the United States and Venezuela are being driven by the prevailing cargo and oil prices, the top executive of India’s state-owned Oil and Natural Gas Corporation (ONGC) has said.
“Imports are decided by the price, except for term crudes. Now term crudes are gradually going down. Spot crudes are mostly decided cargo-to-cargo based on price,” ONGC chairman and CEO, Arun Kumar Singh, told Indian media after the company’s annual general meeting.
“So, how much will be imported, we don’t know. But it looks like at least 60 per cent plus of India’s oil imports is a function of the price in that particular month or M+2,” Singh added.
In the bigger picture amid the geopolitical upheaval that has trapped Indian term supply in the Persian Gulf, supply is actually not an issue as India will always find crude to import, the executive said.
“It is some geopolitical issue which is causing trouble, and ultimately economics prevail. Geopolitical disturbances could be for some months or years, but ultimately world economy prevails,” Singh said.
Despite a decline in dependence on primary energy imports, India remains highly dependent, at a massive 90%, on crude oil imports for its consumption.
India, the world’s third-largest crude oil importer, has seen its dependence on crude oil imports steadily rising in recent years amid soaring demand and falling domestic production.
The Middle East crisis sent Indian refiners scrambling for alternatives and the government looking to expand strategic storage sites to hold more reserves to cushion the next supply shocks.
In the wake of the Iran war and the disrupted crude flows at the Strait of Hormuz, India found itself in search of alternatives to replace the lost Middle Eastern supply. Record crude oil imports from Russia have helped cushion the blow, but India also turned to West Africa, Venezuela, Brazil, and the U.S. for spot supply to offset cargoes that aren’t coming out of the Persian Gulf.
By Tsvetana Paraskova for Oilprice.com
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