New Delhi: The US has become the biggest gainer of its decision to impose sanctions on oil producing countries Iran and Venezuela.
America has steadily improved its exports post sanctions and has now become the second biggest oil supplier to India, the world’s third largest oil consumer.
As per trade data, the US supplied almost 2.2 million tons (mt) of oil to India in February, higher than even Saudi Arabia, which had traditionally been among the biggest exporters of oil to India. This is 48 per cent growth in US oil exports to India and is accounting for almost 14 per cent of India’s total oil imports in February.
Surprisingly, the Saudis supplied about 1.8 mt of oil to India in February, a fall of over 40 per cent, that pushed it to number four position among countries meeting energy demand of the world’s third largest oil importer.
Sources said US sanctions have lifted oil trade with the US as it is quickly occupying the space vacated by Iran that has been among India’s top three oil suppliers in the past.
Before sanctions reduced Iranian oil supplies to almost zero level in FY21, the Islamic nation used to export over 20 mt of oil to India, accounting for over 10 per cent of the country’s total oil imports.
This year (FY21) up to February, imports from the US has already increased to its highest ever level of about 13 mt and May end the year with 15 mt of oil imports. India imports over 200 mt of oil per year and meets 85 per cent of domestic oil needs through shipping channels.
In 2020-21 April-December, US was the fourth largest supplier ($4.9 billion) after Iraq ($9.4 billion), Saudi Arabia ($8.9 billion) and UAE ($7.4 billion)
India began imports of oil from the US in 2017.
For the US, the trade dispute with China has meant exploring a nearer market for its surplus oil which this year has become very distinct with lower demand in the domestic market. India has provided the right market in this environment to push oil sales.
“Indian refineries are preferring to go for cheaper US crude purchases as it helps them offset supply cuts announced by OPEC + and unilateral 1 million barrel per day production cuts by Saudi Arabia. India has been pushing OPEC to increase production and help tame rising crude prices that goes against the interest of prime oil.