Indian refiners are buying crude oil headed to China at deep discounts as the world’s largest importer of oil has cut its refining output by over 1.5 million barrels per day (bpd) due to the worsening effect of coronavirus on energy markets.
“It’s an opportunity for us. In the spot market, we are getting a discount anywhere between $3 and $5 per barrel of crude. The price of crude has already fallen to $55 from $70 in early January due to spread of coronavirus. We have contracted for certain varieties of crude for as low as $49 a barrel,” a director of a state-owned oil firm told The Hindu . India is the world’s third largest crude importer and meets 83% of its crude requirements through imports. “China has rejected a significant amount of crude due to spread of coronavirus. This offers a great opportunity for Indian refiners as certain grades of African and Latin American crude oil are available at deep discounts. The freight rates have gone down by almost 50%,” said the head of another refiner.
India has imported 111.4 million tonnes of crude oil from April to September 2019.
R. Ramachandran, Director (Refineries) at Bharat Petroleum Corporation Ltd. (BPCL) told The Hindu , “We have bought 5 cargoes in the last one month at discounted rates and we are going to buy more. The price of crude has already come down to around $55 a barrel from $70 a barrel due to coronavirus spread and we are further getting discounts as Chinese have cut down their refining capacity.”
Meanwhile, Iraq has become India’s top crude oil supplier by exporting 26 million tonnes to India during April- September 2019, overtaking Saudi Arabia, which sold about 20 million tonnes of crude oil to India during the first six months of the current fiscal.
