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Nigeria sparks crude concerns

New Delhi, March 26: The disruption in Nigerian crude oil production spells trouble for India as the African nation has emerged as the single largest source of crude supplies for the country and dependence on it has increased with the Iraq war.

Reliable sources disclose that during this fiscal India has imported more crude from Nigeria than even Saudi Arabia. Statistics for April to October 2002 reveal that 6.8 million tonnes of crude was imported from Nigeria compared with 5.1 million tonnes bought from Saudi Arabia, which was the second largest supplier.

Given the uncertainty in West Asia and the war in Iraq, the importance of Nigeria as a source of crude supplies has only increased.

If the inter-tribal trouble in Nigeria continues to disrupt crude production, this would naturally lead to an increase in international crude prices in the same manner that the Venezuela oil workers strike did. This gives rise to serious concern since it has come at a time when the war in Iraq does not appear to be heading for an early finish.

The contained nature of the war and the capture of the Umm Qasr port in Iraq, of course, mean that the Gulf supplies are still accessible. However, crude prices are on the rise after the initial decline. While the Iraq war itself translates into a larger consumption of oil due to the military operations, this will be offset by the fact that the winter months have drawn to a close. As a result demand for oil will fall.

Oil industry analysts, therefore, do not expect prices to skyrocket.

The Indian crude import basket comprises a mix of sour and sweet crudes in the ratio of 52:48. While the sour crudes are imported mainly from the Gulf, Nigeria accounts for the bulk of the sweet crude.

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