Middle East, US crude oil curbs Indian appetite for African supplies

Above, a refinery of Essar Oil, which runs India’s second biggest private sector refinery, in Vadinar in the western state of Gujarat. India’s oil imports in October totaled 4.1 million barrels per day. (Reuters)
Updated 17 November 2017
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Middle East, US crude oil curbs Indian appetite for African supplies

NEW DELHI: India’s imports of African crude oil in October plunged to their lowest in over four years, with the world’s No.3 oil consumer increasingly turning to cheaper supplies from the United States and heavier Middle Eastern grades, ship tracking data showed.
US crude production has soared more than 14 percent since mid-2016 to 9.65 million barrels per day (bpd), altering trade routes as its relatively cheap and light grades become a viable import option for Asian refiners.
“Earlier in Asia, West African oil was competing with Middle East grades, but now it has a new competitor: the US,” said Ehsan Ul-Haq, director of crude oil and refined products at consultancy Resource Economist.
Surging US crude output has made West Texas Intermediate (WTI)-linked American oil relatively cheap compared with the international benchmark, Brent, which has been propped up by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
WTI has since October been trading at an average discount of $6 per barrel to Brent.
“In the last few months, US oil gave tough competition to the African grades and the price difference (between WTI and Brent) was good enough to cover the freight,” said R Ramachandran, head of refineries at Bharat Petroleum Corp. .
US crude oil exports to India were unheard of until 2015, when Washington eased tight export restrictions in parallel with its growing output.
Rising steadily this year, US oil in October accounted for about 3 percent of India’s overall imports, while the share of African crude fell to about 10.5 percent, the lowest since November, 2012, the ship tracking data in Thomson Reuters Eikon showed.
India’s oil imports in October totalled 4.1 million bpd, a decline of 15 percent over September, when they hit a monthly record. The imports were also 4.6 percent lower than a year ago. Of that, around 430,000 bpd came from Africa, the lowest level since March, 2013.
Supply disruptions in Nigeria also dented its exports, forcing Indian refiners to seek supplies elsewhere.
Last month, the share of the Middle East crude in India’s overall imports rose to its highest in about a year, making up almost 70 percent of all supplies, the data showed, shipping over around 2.8 million bpd.
Ramchandran said India’s new and expanded refineries were geared toward processing heavy oil from the Middle East.
“Instead of low sulfur, refiners are looking at medium sulfur oil, so cargoes are shifting from West Africa to the Middle East,” Ramachandran said.
India’s biggest oil supplier is Iraq, followed by Saudi Arabia. Iran replaced Nigeria as the third-biggest supplier.


Emirates Airline half-year profit slides 86% on oil hike

Updated 15 November 2018
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Emirates Airline half-year profit slides 86% on oil hike

DUBAI: Emirates Airline on Thursday posted an 86 percent drop in half-year profits as the Middle East's leading carrier was hit by a hike in oil prices and currency devaluations.
The Dubai-based airline in a statement its net profit in the six months to September 30 was also impacted by other challenges and expected tough months ahead.
Emirates said it recorded a profit of just $62 million in the first half of the 2018-2019 fiscal year compared with $452 million in the same period last year.
"The high fuel cost as well as currency devaluations in markets like India, Brazil, Angola and Iran, wiped approximately 4.6 billion dirhams ($1.25 billion) from our profits," said Sheikh Ahmed bin Saeed Al-Maktoum, chairman and chief executive of Emirates Group.
Emirates, one of the world's biggest airlines, said fuel costs rose by 42 percent compared with the same period last year.
The company, which flies to more than 150 destinations, said the cost of fuel amounted to a third of its expenses.
Emirates is the world's largest operator of Airbus A380s with more than 100 of the superjumbos in its fleet.
"The next six months will be tough, but the Emirates Group's foundations remain strong," Sheikh Ahmed said in a statement.
In the six months to September 30, the airline carried 30.1 million passengers, a rise of three percent on the last fiscal year, the company said.
Emirates' revenues were 10 percent higher than the previous year at $13.3 billion.
"We are proactively managing the myriad challenges faced by the airline and travel industry, including the relentless downward pressure on yields and uncertain economic and political realities in our region and in other parts of the world," said Sheikh Ahmed.
Profit for the Emirates Group, which also includes Dnata, a leading air services provider, was also down by 53 percent to $296 million.