As fuel prices skyrocketed across India in the past few weeks, the government blamed it on a rise in international crude prices. The validity of the explanation lies in the fact that India is the world's third-biggest oil importer, shipping in about 84 percent of its crude needs. India imported 3.92 million barrel per day (BPD) in February, 18 percent less from January, according to Reuters data.

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Who are India’s crude oil import sources?

Among the crude import sources, Iraq tops the list. It supplied 8,67,500 BPD in February. This figure is, however, a 23 percent drop from January to a five-month low, according to the Reuters data.

Last month, the United States overtook Saudi Arabia as India’s second-biggest oil supplier. In February, India imported a record 5,45,300 BPD from the US, the world’s top crude producer, a rise of 48 percent from the previous month. This accounted for 14 percent of India’s overall imports last month, as per the data.

In contrast, February imports from Saudi Arabia fell to a decade low of 4,45,200 BPD, which is 42 percent less than January, the data showed. Saudi Arabia has now slipped to the fourth position for the first time since at least January 2006.

Nigeria has gone up to the third position from fifth, exporting 4,72,300 BPD, highest since October 2019.

What happened with the Middle East imports?

According to trade sources, refiners boosted cheaper US crude purchases to record levels to offset OPEC+ (Organization of Petroleum Exporting Countries and its allies) supply cuts.

Also, lower US crude demand, coinciding with Saudi Arabia’s voluntary extra 1 million BPD output cut, on top of an agreement by the OPEC+ to maintain lower production, brought about the change.

India has also blamed Saudi’s voluntary cuts for contributing to the spike in global oil prices and repeatedly called on OPEC+ to ease supply curbs.

With the OPEC ignoring calls from New Delhi, Indian state refiners are now planning to cut oil imports from Saudi Arabia by about a quarter in May.

The state refiners, which control about 60 percent of India’s 5 million BPD refining capacity, import an average of 1.47-1.48 crore barrels of Saudi oil a month, sources said.

Meanwhile, OPEC+ has decided to extend most cuts into April.

Indian refiners can’t cut April imports from Saudi as nominations were placed before the OPEC+ decision earlier this month, the sources said.

Saudi has maintained average monthly volumes for Indian refiners but rejected the demand for extra supplies.

What is India’s aim?

India aims to bring the oil import down to 67 percent by 2022 with the help of local exploration, renewable energy and indigenous ethanol fuel, according to reports.

Indian oil and gas industry goes back to 1889 when the first oil deposits were found near Digboi, Assam. As of March 31, 2018, the country had an estimated 594.49 million tonnes of crude oil reserves.

(Edited by : Abhishek Jha)