India’s largest refiners, Indian Oil and Bharat Petroleum, are weighing a step to lift their Saudi oil intake in February as Saudi Aramco reduced the price of Arab Light to its lowest level since late 2020. Reuters first reported the potential move, highlighting how the price slide has opened room for Indian buyers to revise their procurement plans. The shift underscores a broader strategic effort by India to diversify its crude sources while managing currency and payment constraints amid Western sanctions on other suppliers.
In February deliveries, Arab Light was priced at about $1.8 per barrel below the Oman/Dubai benchmark, marking the deepest discount observed in more than four years. This price gap is driving talk that Indian refiners may add roughly one million barrels of crude per month from Saudi Aramco, a signal that procurement teams are ready to capitalize on favorable pricing as the market adjusts. Aramco typically informs Asian buyers about next month’s volumes by the 10th of the current month, a practice that helps refiners plan shipping, storage, and processing capacity in advance, Reuters notes.
The principal driver behind India’s renewed appetite for Saudi crude is the challenge of paying for Russian oil under Western-imposed sanctions. The price cap and associated payment restrictions have complicated direct access to Russian crude, prompting buyers to look for alternative supplies that still offer competitive economics. The shift also aligns with India’s ongoing objective to secure stable energy supplies at favorable terms while keeping import costs in check.
Over the past year, India has accelerated purchases of discounted Russian oil, lifting Russia into a leading role as a supplier of crude to Indian refiners. This growth comes despite political tensions and global price pressures, signaling a balancing act between securing cheap material and maintaining long-term relationships with traditional suppliers such as Saudi Arabia and Iraq.
However, Western price caps and tightened payment rules have complicated Russian oil transactions, contributing to a noticeable dip in Russia’s crude imports to their lowest level in about eleven months as December ended. In response, Indian Oil has faced certain supply challenges with its existing Russian supplies. The agency has indicated it may broaden its mix by increasing long-term deals with other producers, including Nigeria and Angola, to offset any volume reductions from Russia and to preserve refinery throughput and pricing stability.
Meanwhile, the political and economic landscape in Iraq is also shifting. Reports from early January indicated plans to halt imports of petroleum products anew, a move that could influence regional supply dynamics and pricing pressures in the broader Middle East and Asia markets. The evolving supply mix continues to push buyers to weigh reliability, costs, and the ease of settlement when choosing between Gulf, African, and Eurasian sources. As global traders reassess flows, the market remains attentive to policy signals and the practical realities of ship availability and terminal capacity, with a new round of adjustments likely in the months ahead, as observed by market observers and industry sources.
In related commentary, some industry observers have suggested that the world fleet of tankers is facing tighter conditions and aging assets, implications that could influence shipping costs and delivery schedules for oil shipments, including those bound for Indian importers. The overall market environment remains subject to rapid shifts in price, sanctions policy, and the balance between supply discipline and demand recovery, making monthly procurement decisions highly consequential for refiners and national energy security strategies, according to industry watchers with close ties to the Asia-Pacific and Middle East markets.