Opec+ giants pump out additional oil to India

Time of India

3 days ago

Saudi Arabia, Russia, Iraq and the UAE—the heavyweights of the Opec+ producers' alliance and India's top four suppliers—are ramping up oil production and directing most of their additional output to India, boosting their combined market share to nearly 78% in the world's third-largest oil consumer. In May, these four countries supplied 375,000 barrels per day (bpd) more to India than in April, according to energy cargo tracker Vortexa.
That's even higher than the 359,000 bpd they had collectively committed to additionally produce under Opec+'s plan to raise output by 409,000 bpd. Saudi Arabia, the biggest contributor to the group's supply increase, delivered the largest incremental volume to India in May, expanding its market share by 3 percentage points over April to 13.1%. The gain was driven by price cuts offered to Asian buyers.
Saudi Aramco
had cut the May OSP for Arab Light—its flagship grade—by $2.30 per barrel.
Competing for Larger Share
This has brought down the premium to $1.20 above the Oman/Dubai benchmark for Asian buyers. The premium remains at $1.20 for July loadings, after briefly rising to $1.40 for June.
'The recent Saudi Aramco's official selling price (OSP) cuts for May loadings—close to four-year lows—along with the widening Brent-Dubai Exchange of Futures for Swaps (EFS) made Middle Eastern crude grades more competitively priced than other Brent-linked crudes,' said Xavier Tang, market analyst at Vortexa. 'Production increases from Saudi Arabia and other
OPEC
members play an essential role in the Dubai crude price structure.'
Saudi Arabia's aggressive pricing strategy comes as global suppliers compete for a larger share of India's growing crude market. 'Saudi is offering attractive prices to gain share in India,' an Indian refinery executive told ET. China, despite having a much larger oil market, has seen demand slow as buyers increasingly shift to electric vehicles, he added.
Russia retained the top position among India's crude suppliers, thanks to continued discounts on its barrels.
As part of the OPEC+ May supply boost, Saudi Arabia had agreed to increase output by 166,000 bpd, Russia by 79,000 bpd, Iraq by 37,000 bpd and the UAE by 77,000 bpd. Their respective exports to India rose by 135,673 bpd, 114,016 bpd, 66,642 bpd and 58,365 bpd. This translated into market shares of 13.1%, 35.4%, 21.4% and 7.6% in May. Collectively, their share rose 8.1 percentage points to 77.5%. These gains came at the expense of African suppliers, whose share in India's crude imports fell to 4.9% in May from 11.8% in April. US crude exports to India also declined, reducing its share to 5.7% from 7%.
Eight OPEC+ countries have agreed to raise output by another 411,000 bpd in June and again in July. The rising supply has put pressure on prices, which have hovered between $60-65 per barrel for more than two months, well below the 2024 average of $80.