A country with more than one billion people in it is obviously a potentially lucrative target, which makes the news that Saudi Arabia has been at least temporarily supplanted by Iraq in oil sales to India worthy of attention.
During the second quarter of 2016, Iraq accounted for 20 percent of the Indian market’s oil purchases, compared to an 18 percent share for the Saudis. One year ago, Saudi Arabia was the country with 20 percent of the market, while Iraq’s amount stood at 16 percent.
The Saudis have taken steps to block any further slicing into their share of the market by reducing prices, though some industry experts expect another price cut to be forthcoming.
One key reason that Iraq has seen an increase stems from the growing popularity of its Basra Heavy crude oil within India. The reason for that surge relates to the huge push to grow the country’s infrastructure, whereby that specific crude oil helps in the production of bitumen. That, in turn, is used to build approximately 25 miles worth of roads every day.
Saudi Arabia’s imports to India amounted to 768,000 barrels per day during that specific quarter, compared to 847,000 by Iraq. However, one key number could potentially portend that Iraq’s stay at the top will be a brief one. That’s based on the fact that when breaking the numbers down by each month, the Iraq imports to India dropped 13 percent in June.
Whether or not that’s the case remains open to debate, though individuals at some of the refineries in India say that the issue was related to loading issues. Their belief is that the production will again return to the quarterly levels in September, which coincides with the end of monsoon season.