Saudi Arabia's Energy Minister Khalid al-Falih has stated that strengthening relations with Delhi is a strategic priority for Riyadh. He said it stands committed to meeting all of New Delhi's energy needs, including oil. World's largest oil exporter, the country is set to supply Indian buyers with an additional four million barrels of crude oil in November, as per sources familiar to the matter. The extra cargoes stress on the willingness by the country to increase crude supply to make up for the shortfall once sanctions by the United States on oil exports from Iran, start on November 4.
Sources said companies like Reliance Industries Ltd, Hindustan Petroleum Corp, Bharat Petroleum Corp, and Mangalore Refinery Petrochemicals Ltd are seeking an additional 1 million barrels each in November from Saudi. Indian refiners have placed orders to buy 9 million barrels from Iran in November. One of the reasons for the additional demand for Saudi oil is also the crude arbitrage from the United States is shut, prompting Indian buyers to turn to Middle Eastern barrels. The world's third-largest oil importer, India is currently grappling with a combination of rising oil prices and falling local currency, making oil imports more expensive.
Retail prices for gasoline and diesel fuel in India stand at record high and the government has cut its excise tax on fuel to ease some of the pressure built on consumers. Indian Oil Minister Dharmendra Pradhan said he spoke with al-Falih and reminded him that OPEC and other major oil producers had promised to raise their output at a meeting in June. India imports approximately 25 million barrels per month from Saudi Arabia.
Al-Falih, who was in India last week, said, “I had a meeting with Prime Minister Narendra Modi and Petroleum Minister Dharmendra Pradhan, and assured them of our full and continuing commitment to meet India's energy demands, especially in oil, and to invest in India. To strengthen relations with India is a strategic priority of the Kingdom of Saudi Arabia.” He said the majority of oil demand came from sectors such as heavy vehicles and commercial vehicles, and the demand would remain for a long time to come.
“The oil price being currently felt would have been much worse if we had believed people who 4-5 years ago said that oil demand had peaked and would decline. But Saudi Arabia pro-actively and responsibly invested to strengthen our spare capacity and so averted a major price shock.”
