Economy News – Baghdad
Industry experts have indicated that oil-producing nations in the Middle East, particularly Iraq and Saudi Arabia, may face challenges in meeting India’s crude oil demand in the upcoming months if U.S. sanctions on Russia disrupt supply chains in the region.
Gorreit Singh, General Manager of the Indian Oil Federation, noted that India has formulated a strategy to offset its reliance on Russian crude. This approach includes increasing imports from Iraq, Saudi Arabia, and the United States, reflecting the current geopolitical climate.
An official from the Iraqi Oil Marketing Company, known as “Sumo,” shared insights with S & B Global Community Insights regarding the crude allocation for 2025, indicating that immediate supply is constrained as current allocations have been pre-established.
This situation suggests that the second-largest producer in OPEC may struggle to bridge any supply gaps experienced by India.
Additionally, Saudi Arabia is facing its own supply limitations, as India will need to wait until April for the availability of any Saudi crude, following the final shipments scheduled for next March.
Despite OPEC maintaining its current production discounts, there are expectations of a potential reduction soon, which could lead to an uptick in market availability.
However, the planned increases for Saudi Arabia and Iraq of 56,000 barrels per day and 12,000 barrels per day, respectively, set for next April, may be influenced by evolving market conditions.
The production levels of Iraq and Saudi Arabia are constrained by their commitments under OPEC+. Iraq frequently falls short of its allotted production share.
In January, Iraq produced 4.06 million barrels per day, marking a decline from December but still exceeding its quota by 60,000 barrels per day.
Meanwhile, Saudi Arabia’s production was slightly below its target of 8.978 million barrels per day, reaching 8.97 million barrels per day.
On January 10, the United States and the United Kingdom enacted new sanctions targeting the Russian energy sector, including two major oil producers: Gazprom Neft and Surgutneftegas.
The true impact of these sanctions remains uncertain, with some analysts suggesting that their tangible effects may be limited.
In January, approximately 1.2 million barrels per day of Russian crude was exported to India, as reported by Chinese statistics. Of this, 490,000 barrels per day of Ural crude were shipped to India during February.
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