India's annual oil imports
surged to a record high in 2016 as some refiners resumed purchases after the lifting of sanctions against Tehran, according to ship tracking data and a report compiled by Thomson Reuters Oil
Research and Forecasts.
The sharp increase propelled Iran
into fourth place among India's suppliers in 2016, up from seventh position in 2015. It used to be India's second-biggest supplier before sanctions.
For the year, the world's third-biggest oil
consumer bought about 473,000 barrels per day (bpd) of oil
to feed expanding refining capacity, up from 208,300 bpd
in 2015, the data showed.
In December, imports
trebled from a year earlier to about 546,600 bpd.
In 2015 refiners slowed purchases due to sanctions which choked payment routes, insurance and halved Iran's exports.
Indian refiners Reliance Industries, Hindustan Petroleum, Bharat Petroleum and HPCL-Mittal Energy Ltd (HMEL) last year resumed imports
from Tehran, attracted by the discount offered by Iran.
"In most of 2016 there was a fight among Gulf producers to increase their market share and lifting of sanctions against Iran
has intensified that fight," said Ehsan ul Haq, senior analyst at London-based consultancy KBC Energy Economics.
In April-December, the first nine months of this financial year, Iranian supplies to India
averaged a record 530,300 bpd, up from about 400,000 bpd
before sanctions tightened against Tehran.
India's 2016 Iranian oil imports
were the highest in at least six years, according to the Reuters data.
Government data going back over a longer period shows the average was the highest since the 2001-02 financial year.
imported 4.3 million bpd oil
in 2016, up 7.4 per cent from the previous year.
MIDDLE EAST JUMP
and Iraq lifted the Middle Eastern share in India's crude diet to 64 per cent in 2016, reversing a declines in recent years, partly due to rising prices for Atlantic Basin oil
tied to Brent.
The average premium for Brent jumped against Dubai crude to more than $3 a barrel in 2016 from around $1.80 in 2015.
"In 2016 Iran
ramped up its output to regain market share while Iraq segregated its production into Basra Light and Heavy to attract customers. Basra Heavy was sold at a discount, making it more attractive than rival grades," said Haq.
Iran's share of Indian oil imports
surged to 11 per cent in 2016 from 5 per cent in 2015.
Saudi Arabia remained the top supplier to India
last year followed by Iraq and Venezuela.
from Latin America declined for a second year, with its share of imports
shrinking to about 16 per cent from 18 per cent, while Africa's share fell to about 15 per cent from a fifth.
prices brought down production in Latin America while Nigerian barrels were impacted by violence in the Niger Delta. Also falling US oil
output impacted trade flows, with some Latin American and African oil
finding a place in the US," Haq said.