Tuesday, December 12, 2023

After COP discussions, India might purchase more oil from the UAE in the upcoming months.

Following conversations between the two nations on the fringes of the ongoing COP28 meeting in Dubai, many people with knowledge of the situation claimed that India is anticipated to increase its purchases of crude oil from the United Arab Emirates (UAE) in the upcoming months.

Historically, the UAE has been India's third-largest crude supplier.

Since Indian refiners started going crazy for Russian oil in 2022, it has seen the biggest decline in imports.

According to figures from the commerce department, India purchased $3.2 billion worth of crude oil from the UAE in the first half of the current fiscal year (FY24), compared to $9.35 billion during the same period last year.

The ensuing 65% decline is the greatest among India's top 10 crude oil suppliers.

After COP discussions, India might purchase more oil from the UAE in the upcoming months.

A free trade agreement between the two nations was struck in May 2022, with the goal of increasing non-oil commerce to $100 billion by 2030.

However, since hydrocarbons account for about half of bilateral shipments, trade in these products will continue to play a significant role, according to officials.

"We anticipate receiving more UAE-sourced crude in the upcoming months. Talks are presently taking place in Dubai, according to a representative of a significant refinery.

He made note of the fact that starting in January 2024, the UAE plans to increase exports of its premium Murban grade of petroleum.

The Indian Oil Corporation Limited (IOCL) and the Abu Dhabi National Oil Company (ADNOC) carried out their first crude oil transaction via the Local Currency Settlement (LCS) method in August of this year.

According to officials, this should lower transaction costs, shorten settlement delays, and increase trade predictability.

Conversations in Dubai

On October 12, the United Nations Conference of the Parties of the United Nations Framework Convention on Climate Change, or COP, will conclude its annual conference.

The summit is happening at a time when opinions among countries are becoming more and more divided about how to reduce the world's consumption of gas and oil significantly in order to keep global warming to 1.5 degrees Celsius by the year 2050.

India is seeking to restore supplies from its old allies in West Asia, having secured significant imports of Russian crude for more than a year.

Several people with direct knowledge of the matter have confirmed that senior representatives from state-owned oil marketing companies have traveled to the summit and have held talks with other significant international oil companies.

According to Reuters, India's imports of Russian crude fell to 33% in October from 35% in September, a significant decrease from the historical high of 42%.

This has transpired concurrently with the gradual increase in Saudi Arabia's and Iraq's share in recent months.

According to projections from London-based commodity data analytics company Vortexa, which measures imports by tracking ship movements, Saudi Arabia's imports increased to 924,000 barrels per day (bpd) in October from 523,000 bpd the month before.

In the meantime, Russian exports to India decreased by 8% in October, from 1.62 million barrels per day (bpd) in September to 1.55 million bpd.

Most Russian oil sold to India since April has been priced between $8 and $10 per barrel below the Dubai benchmark.

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After COP discussions, India might purchase more oil from the UAE in the upcoming months.