Daily Energy Report
US share in India’s oil market, Saudi Arabia’s message to speculators, Europe’s plans for Qatari gas supplies, energy transition policies, Russia’s gasoline exports, and more
CHART OF THE DAY: US Oil Producers Losing Share in India’s Market to Russia
Figure (1) above shows India’s crude oil imports from the US during the first five months of 2021, 2022, and 2023. Crude imports have been declining YoY and this fall became noticeable as India started snapping up steeply discounted Russian barrels. We added the 5-month averages to illustrate the magnitude of the decline. The difference between the average of 2021 and 2023 is 255,000 b/d, while the difference between imports in March 2022—when Russia started diverting oil shipments to Asia— and March 2023 is a decline of 383,000 b/d!
EOA’s Main Takeaway:
Various reports have been published recently on how OPEC members are losing shares in India’s oil market to Russia, suggesting that OPEC/OPEC+ has lost control in this Asian market. However, that’s not how the oil market works. Contracts and price differentials control volumes of shipments and their destinations.
Our analysis shows that all of India’s oil suppliers have lost market shares to Russia, most prominently, the US and African oil producers. The recent decline in India’s imports from Arab Gulf producers has been the result of OPEC’s decision to slash production, and NOT because India has been importing more Russian crude.
Some media reports have focused on African producers which lost significant market shares in India to Russia since they are OPEC members. But these producers have the least power in OPEC! Focusing on OPEC is misleading.
Additionally, such reports have ignored the shrinking US share in India’s oil market (see Figure 1 above). Although this is the result of market dynamics, we cannot ignore its sentimental value of it, especially to India and Russia, as well as to some Republican policymakers in the US.
Meanwhile, suppliers that have lost oil market shares in India have seen a concomitant increase in their shares in the European markets - crude and oil products.
Two important events need to be watched closely next month: the OPEC+ meeting scheduled for June 4, and Aramco’s OSP release which is expected on June 5.
STORY OF THE DAY
REUTERS: Saudi Arabia's energy minister warns speculators ahead of OPEC+ meeting
During the Qatar Economic Forum organized by Bloomberg, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman addressed short sellers, saying: "Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April, I don't have to show my cards I'm not a poker player... but I would just tell them to watch out,” according to a report published by Reuters.