OPEC’s share in India’s annual oil imports rises after 8-yr drop
OPEC’s share in India’s crude oil imports edged up in 2024, rising for the first time in nine years, while top supplier Russia’s share remained steady, data obtained from trade sources showed. Russia’s share in the world’s third-biggest oil importer and consumer is expected to drop in 2025 after Washington last Friday announced sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world’s No. 2 producer to India and China and tightening ship availability. India imported 4.84 million barrels per day of oil in 2024, up 4.3% from the previous year, the data showed. The share of Organization of the Petroleum Exporting Countries (OPEC) in India’s 2024 crude imports rose to nearly 51.5%, up from 49.6% in 2023, while Russia’s share in 2024 remained at about 36%, the data showed. There is higher demand for Middle Eastern barrels from Asia refiners, especially India, due to lower Russian supplies, said Priti Mehta, senior research analyst at consultancy Wood Mackenzie. Indian refiners have stepped up purchases of Middle Eastern grades since late 2024 as Russian supplies fell, refining sources told Reuters last month. The share of Middle Eastern oil in India’s December crude imports rose to a 22-month high to about 52%, the data showed. However, Russia continued to be the top oil supplier to India, followed by Iraq and Saudi Arabia in December. In recent years, Russia became India’s top supplier as its refiners were drawn to Russian oil sold at a discount after Western nations imposed a price cap and shunned purchases from Moscow. That caused OPEC’s market share in India to shrink to nearly 50% in 2023 from 64.5% in 2022. OPEC’s share has also been consistently declining since 2016 as Indian refiners diversified their purchases to reduce costs.
2025 is a Highly Unpredictable Year For OPEC+
Another year, another set of challenges and dilemmas for OPEC+. The group is set to start unwinding its oil production cuts, but it will have to contend – once again – with many uncertainties and be ready to react to unpredictable events in 2025. From demand concerns to supply uncertainties, OPEC+ has its work cut out for this year, too. The alliance of OPEC and a dozen non-OPEC producers led by Russia will closely watch several major factors for global oil markets this year. These include whether China’s oil demand will rebound in 2025 following lackluster consumption and imports last year, how the incoming U.S. Administration will tackle China, Russia, and Iran, and whether incoming President Donald Trump will choose to impose tariffs not only on China but on major trade partners and allies, too. All these are outside OPEC+’s control. But there is something the group can – or at least should – control: the level of compliance with its own oil production ceilings. Elusive Compliance Rather than targeting a specific price of oil (preferably above $80 per barrel) or market share to recoup from non-OPEC+ producers, the key consideration for OPEC+ in both 2025 and 2026 is full compliance and compensation for historical overproduction, according to Bassam Fattouh, the Director of the Oxford Institute for Energy Studies (OIES), and Andreas Economou from OIES. “These criteria are essential for the group’s cohesion and for the agreement to have its desired effects on market balances and shaping market expectations,” Fattouh and Economou wrote in an analysis this month. “Achieving these criteria will also provide OPEC+ with more flexibility to navigate the current market uncertainties,” they added. OPEC+, in early December, decided to delay the start of the easing of the 2.2 million bpd cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts into the following year, until September 2026. The alliance reiterated the importance of compliance with the cuts and the timely compensation for those producers who haven’t adhered to their assigned quotas. The OPEC+ overproducers – OPEC’s Iraq and non-OPEC+’s Russia and Kazakhstan – still have work to do to fall in line. All three have pledged to compensate for previous overproduction with deeper cuts. Russia, Iraq, and Kazakhstan submitted in July 2024 their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. The cumulative overproduction in these six months was about 1.184 million bpd for Iraq, 620,000 bpd for Kazakhstan, and 480,000 bpd for Russia, OPEC said back then. Russia’s plan envisages Moscow mostly compensating for its overproduction in the months of March to September due to the more challenging conditions in the winter. Now the compensation period is also being extended until the end of June 2026. Supply and Demand Uncertainties This change in compliance and compensation timelines could alter market balances at a time when many other factors are at play. Due to the OPEC+ decision to delay the start of supply additions to April 2025, the market surplus in 2025 may not be as large as previously feared, but a surplus we will see, analysts say. The next OPEC+ moves will depend on a variety of market movers. OPEC and the wider OPEC+ group pride themselves on being proactive in managing oil market balances, but they may have to be reactive once again this year. Supply from Russia and Iraq is already coming under pressure. On its way out, the Biden Administration just sanctioned Russia’s oil exports, traders, and tankers with the heaviest set of sanctions yet. This sent oil prices rallying above $80 per barrel in just two days. The Trump Administration begins formally its term in office at the start of next week and more expansive sanctions from Trump on Iran are widely expected to follow soon. India and China are already looking to source alternative supply as they are reluctant to deal with tankers, traders, and insurers explicitly sanctioned by the U.S. If Russian and Iranian supply drops materially, the other OPEC+ producers could opt to return more barrels sooner rather than later. However, non-OPEC+ supply is set to grow this year, too, led by the U.S., Brazil, Guyana, Canada, and Argentina. This growth could be enough to meet the expected growth in global oil demand, and the market could find itself in a surplus with additional OPEC+ barrels. Moreover, the Trump Administration’s trade policies (read: tariffs) could slow economic growth in China, the U.S., and other major economies, potentially denting global oil demand growth in the near and medium term. Geopolitics and the foreign and trade policy choices of the new U.S. administration will impact the world order and economy, and OPEC+ will have to carefully navigate through all these to remain a relevant force in the oil market.
US sanction clarifications tighten squeeze on India’s February oil supplies
Indian refiners have less time than they expected earlier to receive sanctioned tankers, prompting inquiries for purchase of spot supplies from West Asian producers for February deliveries. Refiners led by Reliance Industries and Indian Oil have until Feb 27 to wind down transactions with sanctioned Russian tankers, opaque traders, a shadow fleet, and important insurers, an official from the US Treasury Department’s Office of Foreign Assets Control (OFAC) confirmed, a few days after Washington announced a fresh round of sanctions on Russian oil flows that left the market in some confusion over enforcement deadlines. The cargoes must be loaded before January 10 to evade sanction laws, the OFAC official said in an email reply to Business Standard, pointing to a clause in General Licence 120. OFAC’s General Licence 120 clarifies the winding-down date: “Except as provided in paragraph (c) of this general license, all transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to the delivery and offloading of cargo involving the blocked persons listed in the Annex to this general license are authorized through 12:01 a.m. eastern standard time, February 27, 2025, provided that the cargo was loaded prior to January 10, 2025.” On payments, OFAC referred to GL 120 in a separate mail, which said that transactions were authorised through 12:01 am eastern standard time, February 27, 2025, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587. That effectively means that Russian oil cargoes on sanctioned vessels must reach India by February 20, as banks take a week to process payments, a refining official said, effectively shrinking supplies for February. Payments are getting delayed because banks are demanding the entire paper trail of individual Russian trades, officials said. Indian government officials said that Russian supplies are on track till February. But ship-tracking data and a surge in tenders for spot cargoes issued by Indian Oil and other refiners to cover for February reflect a crude oil shortfall in February. Reliance and Indian Oil did not comment on US sanctions. Russian oil supplies for February are already dropping, with arrivals estimated at below 800,000 barrels per day (bpd), according to ship-tracking data. Tanker arrivals in the first half of January averaged 1.5 million bpd, marginally higher from December, with predictions of as much as 1.9 million bpd for January, the highest since July, according to market intelligence agency Kpler. Bookings for January cargoes are made 45 to 60 days in advance. Typically, it’s early to call February, but the January 10 sanction order has led to cancellation of several tankers, industry sources said and refining data showed. More than 15 tankers which were supposed to load cargoes after January 10 for February deliveries were stranded after India rejected the cargoes.
Indian Oil Corp seeks sour oil from spot market, trade sources say
Indian Oil Corp(IOC), the country’s top refiner by capacity, is seeking to buy high-sulphur oil through spot tenders, its first sour crude import tenders since March 2022, trade sources said on Thursday. The company has also launched a separate tender seeking sweet crude, the sources said. IOC is seeking cargoes loading March 1-15. The tenders close on Thursday with bids remaining valid until Friday, they said.
India overhauls E&P regulations in a bid to raise domestic hydrocarbon production
How legislative reforms and ambitious exploration plans are transforming India into a global energy investment hotspot—and why international investors are taking notice. Global investors take notice when a nation importing more than 85% of its crude oil decides to revolutionise its energy exploration framework. India’s recent parliamentary approval of amendments to the Oilfields (Regulation and Development) Act, 1948 signals more than just regulatory change—it represents a calculated move to position the country as a premier destination for global energy investment. For international investors, this legislative reform is a strategic pivot designed to attract an unprecedented level of international capital and expertise to one of the world’s most promising energy markets under significantly improved conditions for exploration and production of hydrocarbons in a more sustainable manner. Breaking down the investment catalyst The cornerstone of India’s energy sector transformation lies in a comprehensive legislative overhaul. These amendments are not mere technical adjustments, but carefully crafted incentives designed to attract international capital and expertise. By modernising terminologies and aligning regulations with global standards, India has effectively removed all barriers to investment. For ESG-conscious investors, India presents a unique proposition The reforms address long-standing concerns of international investors, particularly regarding regulatory predictability and operational flexibility by introducing a framework that aligns with international norms, making it easier for energy companies to navigate the Indian market. For instance, the modernisation of terms like ‘mineral oils’ might seem technical, but it represents a fundamental shift in how India approaches energy sector governance. This alignment with international standards eliminates the confusion that has historically deterred potential investors and creates a framework that global energy companies can easily navigate. The numbers that matter What makes this opportunity particularly compelling is its scale. India is offering exploration blocks spanning 50,000km²—a scale that demands attention from serious players in the global energy market. More significantly, the country has opened up 99% of previously restricted areas for exploration, aiming to explore 15% of sedimentary basins by 2030. This ambitious expansion creates multiple entry points for investors of varying sizes and strategic interests. The sheer magnitude of unexplored territory, combined with India’s growing energy demand, presents a rare combination of scale and market potential. Early movers in this space have the opportunity to establish strategic positions in what could become one of the world’s most dynamic energy markets in terms of investment as well as return on investment. The right incentives The reformed regulatory framework introduces several investor-friendly features that significantly improve the risk-return profile of Indian energy investments. Key features include: – Lease term stability: Ensuring long-term visibility for planning and investment – Enhanced dispute resolution: Aligning mechanisms with international standards – Infrastructure sharing: Reducing operational costs and improving project economics – Streamlined approvals: Cutting administrative delays for faster project execution – Decriminalisation of non-compliance: Shifting focus from punishment to remediation. India’s strategy extends beyond mere regulatory reform. Additionally, the country is establishing a comprehensive ecosystem that includes: Competitive tax structures: Enhancing ROI, with specific provisions for technology-intensive projectsAdvanced technology transfer frameworks: Balancing intellectual property protection while fostering innovationRisk-sharing: Innovative risk-sharing models benefiting both large and small operators, creating opportunities for specialised players Support for enhanced oil recovery: With fiscal incentives for deploying advanced technologies Digital infrastructure integration: Simplifying operations and boosting efficiency.