India, the world’s third-largest oil importer, is a major market for the Organisation of the Petroleum Exporting Countries (OPEC). OPEC is an international organisation of 14 oil-exporting countries led by Saudi Arabia which decides on the amount of oil production and the price of oil in international markets. Giving a major jolt to the OPEC, India has turned to the United States, Canada, Guyana and some small producers in Africa for supplies. India’s crude oil import from OPEC is standing at a 15-year low.
India’s oil import bill shrunk to 70% in 2021
Indian oil imports shrunk in their share of the pie in 2021 to the lowest in the last 15 years despite purchasing a 4% rebound in annual crude data.
As per a Reuters analysis of the data from 2007 to 2021, members of the OPEC, especially from the Middle East and Africa, saw their share in oil exports to India shrink to 70% in 2021, from a peak of 87% in 2008.
India’s crude imports rebounded 3.9% to 4.2 million barrels per day (bpd) in 2021 but remained the lowest in more than a decade.
“With fears of Omicron spread receding and refineries are expected to operate at full capacity because of improved cracks and fuel demand, Indian oil imports could rise by about 5%,” said M. K. Surana, chairman of state-run Hindustan Petroleum Corp (HPCL).
As per the data, “The share of Latin American oil plunged to a 12-year low of 8.7% as India halted imports from Venezuela under pressure from U.S. sanctions. Middle Eastern oil accounted for about 62% of India’s overall imports.”
It is pertinent to note that U.S. sanctions made it difficult for India to import crude from Venezuela and Iran. Thus, OPEC countries are facing the repercussions as India jumped ships to buy from Canada and some small producers in Africa.
The 14 OPEC countries (Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela) account for an estimated 44 per cent of global oil production and 73 per cent of the world’s “proven” oil reserves, which gives the organisation major leverage over global crude prices.
The OPEC mafia manipulates the market prices of crude according to its will by decreasing or increasing production.
Earlier in 2020, when the crude prices collapsed, OPEC did a massive cut in oil production to ensure price rise. And the prices did rise once the countries opened up after pandemic-induced lockdowns were lifted. The shipping issues further contributed to rising in price, and now the crude has breached 80 dollars per barrel, thus significantly increasing the import of bills of countries like India and China.
However, Prime Minister Narendra Modi is pushing for electric vehicles to become the new standard in India. As India increasingly begins relying on renewable sources for its energy needs, the country’s oil imports will definitely witness a plunge – improving the health of our overall import bills.