Iraq has reduced annual supplies of Basra crude oil to several Indian refiners by up to 20% for 2021, industry sources said, in a rare move by OPEC’s second-largest producer which is trying to meet its obligations under the group’s production deal.
Iraq was the top oil supplier to India in 2020 and a reduction in long-term Basra crude supplies could erode Baghdad’s market share in the world’s third largest oil importer and consumer.
Iraq’s Oil Marketing Company (SOMO) has reduced the 2021 Basra term volumes to several Indian refiners by between 10% and 20%, the sources said.
SOMO did not immediately respond to a Reuters request for comment. “We never expected Iraq to cut volumes. We may have to look for alternatives like tapping the spot markets,” said a source at one of the Indian refiners.
“This is happening at a time when we are preparing to increase run rates as fuel demand is recovering.”
SOMO told Indian refiners that it had reduced annual contracts for all Asian buyers to compensate for higher volumes produced in the previous year, one of the sources said.