EnergyGeneral Studies III

Reducing oil imports from Saudi Arabia


Public sector oil marketing companies are set to cut their crude imports from Saudi Arabia as a result of sustained production cut from OPEC+.


India has been demanding OPEC+ countries to bring production back to normal but they are not inclined to accept the demand.


  • OPEC+ group has decided to maintain crude oil output to pandemic levels even though the demand for the crude has grown to pre-pandemic levels.
  • A consistent rise in crude oil prices has resulted in fuel prices reaching record highs in India as 80 per cent of its crude oil requirements are imported.
  • Saudi Arabia has cut its production to 1 million barrels per day. This has severely impacted the rise in price of the oil.
  • Indian petroleum ministry has asked for increasing the production citing high crude oil prices were slowing the economic recovery after the Covid-19 pandemic.
  • Saudi energy minister had suggested India to use crude oil stored in its Strategic oil reserve that it had filled with cheap crude.

 Impact of crude oil prices on India

  • Rise in crude oil prices has led to the increase in prices of petrol and diesel to high level across India with the price crossing Rs 100 per litre in some parts.
  • The rising prices have impacted central and state taxes, which will have to be re-assessed due to present condition. During pandemic, taxes on petrol and diesel were increased.
  • Oil companies have freezed the prices during elections but considering that they are facing negative gain due to rising prices, the cost may rise again.
  • Saudi Arabia has been the second largest oil supplier to India after United States. Considering the situation, India would be inclined to increase imports from other gulf countries and the United States.
  • India’s move to diversify its oil source is a step to get a better discount on procurement which is difficult in a rising crude price environment.

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