Indian Crude Imports Hitting High for the Year

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India’s crude imports so far in October are above 5 million barrels per day – their highest monthly pace so far this year and up over 30 percent versus last month. The increase is driven by oil flows from Arab countries other than Iraq and Saudi Arabia, which are normally seen as the top suppliers. Imports of US crude in October are at a record, one month after Indian Prime Minister Narendra Modi visited the US where he met with representatives from large oil companies.

India has already imported over 12.5 million barrels of US crude, which is the highest monthly volume on our records, although no more arrivals are expected this month.

The change in oil flows we are seeing in India falls in line with the broader influence we are seeing from IMO 2020, as importers pull in greater quantities of sweet crude to prepare for the spec change. The increase in freight rates that followed US sanctions on Chinese shippers and heightened geopolitical risk, however, will impact US flows to India in the coming month.

India has been diversifying its oil sources since US sanctions waivers on Iranian oil imports expired in May. That was the last time we saw direct oil shipments from Iran to India. Since then, Iran’s neighbors have taken a greater share of the Indian market, with Iraqi exports re-testing record highs in August at 1.2mn bpd.

Although Iraq and Saudi Arabia are India’s top oil suppliers, the rise in imports this month has been driven by other producers in the Persian Gulf region. Kuwait and Qatar have boosted flows to their highest pace so far this year.

We have been seeing new trends emerging in the Asian oil market since the beginning of the year, driven by US foreign policy regarding OPEC-member Iran and the upcoming IMO sulfur cap. These shifts should continue as IMO 2020 becomes a reality.