India adds new crude suppliers, but Russia-led 5 countries retain grip on oil imports

New Delhi: India turned to new sources of crude during the Iran war, but adding suppliers did little to change the concentration of its oil supply around a handful of countries, led by Russia.

Nine of the 10 new suppliers together accounted for only 1.4% of India's crude imports in the six-month war period between March and August, according to data from analytics firm Kpler. Venezuela was the exception, accounting for nearly 5% of imports.

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The top five suppliers, meanwhile, accounted for 76% of imports, only slightly lower than their 79% share in the six months before the war.

Changed composition

The composition of the top five changed, though, with Venezuela and Brazil replacing US and Nigeria in the list, while Russia, the UAE and Saudi Arabia remained the leading suppliers.

The Herfindahl-Hirschman Index (HHI), a measure of supplier concentration, rose 56% to 2,513 during March-August from 1,606 in the preceding six months, despite the increase in the number of suppliers.

HHI of above 2,500 is considered high concentration of supplies while HHI of less than 1,500 represents low concentration. The increase was driven primarily by Russia, whose share of India’s crude imports rose to 47% during March-August from 29% in the preceding six months.

Oil prices were near six-week highs on Monday, as of 11.11 pm, amid the escalating West Asia conflict. Brent crude futures were at $97.31 a barrel, having earlier gone higher.

India’s overall imports fell 5% to 4.77 million barrels per day in the last six months.

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India sourced crude from 31 countries during the period, compared with 24 in the preceding six months. Ten countries supplied India despite having supplied no crude in the preceding six months, while three previous suppliers disappeared from the sourcing mix.

Iraq saw the sharpest decline among major suppliers, with its share falling to about 2% from 18%. The 820,000 barrels per day (bpd) decline in Iraqi supplies was nearly offset by a 770,000 bpd increase in Russian supplies to 2.25 million bpd.

Saudi supplies fell by about 300,000 bpd, partly offset by the return of Venezuelan crude at 233,000 bpd and a 50,000 bpd increase in Angolan supplies. The US supplies fell by about 200,000 bpd, while higher volumes from Oman and Brazil provided some offset.

Apart from Venezuela, the new suppliers remained marginal. Iran, Ecuador, the Bahamas, Algeria, the Netherlands, Canada and others mostly supplied crude in only one of the six months.

These flows largely reflected global traders finding incremental barrels as Indian refiners scrambled to replace disrupted Gulf supplies, rather than a major change in sourcing strategy, an industry executive said.