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Indian refiners deepen cuts to Saudi oil purchases in May

Indian state refiners will buy 36% less oil from Saudi Arabia in May than normal, according to three sources, a sign of escalating tensions with Riyadh, even after the Kingdom backed the idea of boost production from OPEC and allied producers last week.

Energy relations between India, the world’s third largest importer and consumer of oil, and Saudi Arabia have deteriorated as global oil prices have climbed.

New Delhi blames cuts by the Saudis and other oil producers for pushing up crude prices as its economy tries to recover from the pandemic. State refiners placed purchase orders for 9.5 million barrels of Saudi oil in May, up from 10.8 million barrels previously forecast, according to three sources.

The refiners – Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd – normally buy 14.8 million barrels of Saudi oil in a month.

The decision to place nominations for less oil was taken on Monday, two days after a telephone conversation between Indian petroleum minister Dharmendra Pradhan and his Saudi counterpart, Prince Abdulaziz bin Salman, on Saturday, according to three sources.

The content of the conversation between the two ministers is not known.

No immediate comment was available from Indian companies, Saudi Aramco or the Saudi oil ministry.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, agreed on Thursday to gradually ease their oil production cuts from May, after the new US administration called on Arabia Arabia, the group’s de facto leader, to keep energy affordable for consumers.

Saudi Aramco, the Kingdom’s state oil company, on Sunday raised the official selling price, or OSP, of its oil for Asia while lowering it for European and American markets.

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