Saudi Aramco offers to increase oil supply to India

13 May 2019

Saudi Aramco will provide additional crude oil to domestic oil refiners to meet shortages arising from the US decision to lift Iran sanction waivers from major oil importing countries, including India.

Sources in state-run oil companies said that the Saudi Arabian oil giant has offered to increase crude oil supplies to India by 200,000 bpd that would meet almost half of the country's oil imports that was coming from Iran.

Increase oil supply

On an annual basis, 200,000 bpd of oil equals about 10 mt of oil per year. India imported 23.9 mt of crude oil from Iran in FY19, making the Gulf country the third biggest exporter of oil after Iraq and Saudi Arabia.

Aramco's offer to Indian oil companies is for deliveries starting June. The oil situation is also expected to get clearer from June when the full might of US sanctions would come into play. Though US sanction waiver was lifted from May 2, India is still getting some oil from Iran on contracts reached earlier.

Sources said that while the Saudi offer of increased oil quantity has generally been welcomed by domestic oil companies as it will help alleviate the squeeze driven by US sanctions on Iran and Venezuela, the supply is unlikely to be made on terms given by Iran. In fact, refiners would face a heftier bill on Arab light crude.

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