Iraqi crude oil shipments to India more than doubled in September as Indian refiners increased purchases from the Persian Gulf supplier, amid elevated shipping risks and rising freight rates.

Shipments from Iraq’s Basrah port to India rose 106.3 per cent month on month to 4.41 million tonne in September, up 13.7 per cent year on year, according to data from Greece-based shipping analytics firm Signal Ocean.

The rebound comes at a time when Russian crude shipments to India declined 32.3 per cent from August to 5.48 million tonne. Russian shipments had ranged between 7.1 million and 9.9 million tonne (mt) a month from March to August, the report said.

Iraqi supplies, which had nearly stalled between March and July, resumed in August and have peaked in September. There were about 21 voyages from Basrah to Indian terminals during the month, compared with nine in August, Maria Bertzeletou, Signal’s senior market analyst and author of the report, told businessline.

The September total of 4.41 mt is just above the January–February average of 4.38 mt, says the report.

On the other hand, Russian crude shipments to India was between 7.1 mt and 9.9 mt a month from March to August, but declined to 5.48 mt in September.

The September volume of Iraqi crude was slightly above the average of 4.38 mt recorded in January and February, before disruptions to Gulf oil movements, the report says.

The return of Iraqi cargoes is supporting tanker demand even as shipping conditions remain uncertain. The extent to which freight rates ease will depend on the continuity of export programmes, improved transit conditions and greater vessel availability, said an industry source.

Peaks in late September
The highest level of shipment activity was recorded between September 27 and 29. The shipment continued during the first 10 days of October, although at a lower level, Bertzeletou said.

The cargoes were destined for Sikka and Vadinar in Gujarat. Sikka accounted for about 75 per cent of the discharge destinations and Vadinar about 26 per cent.

Indian Oil Corporation, Reliance Industries, Bharat Petroleum Corporation and HPCL-Mittal Energy were among the refiners buying Iraqi crude on a free-on-board (FOB) basis and arranging tankers to transport the cargoes, the report said.

Under FOB purchases, refiners arrange vessels and onward transportation, bringing tanker availability, freight rates and voyage-related risks more directly into their crude procurement decisions.

The vessels travelled from Basrah’s offshore oil terminals through the Arabian Gulf and the Strait of Hormuz, across the Gulf of Oman and the Arabian Sea, before reaching the Gulf of Kutch and the Sikka or Vadinar terminals, Bertzeletou said.

The increase in Iraqi crude shipments coincided with disruptions to Saudi Arabia’s East-West pipeline.

FOB shipment
The shift to FOB purchases makes vessel chartering and voyage costs a more direct consideration for refiners, particularly when security concerns affect shipping and insurance.

The UK Maritime Trade Operations reported attacks on vessels transiting the Strait of Hormuz during September. Its September 21 report included vessels affected by incidents that continued towards their destinations. The Iraqi crude shipments took place despite the security risks, Bertzeletou said.

Risks remain
The recovery in Iraqi supplies has not eliminated the risks associated with transporting crude from the region. Elevated war-risk insurance quotations and uncertainty around shipping routes continue to complicate voyage planning and vessel availability, Bertzeletou added.

Source: The Hindu Business Line

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