New Delhi, March 5: Undeterred by the war scare, Indian Oil Corporation (IOC) is picking up a million barrels of crude oil from Iraq and a foreign-owned Suezmax tanker is being topped up today at the Al Bakr port to bring the consignment home.
A senior IOC official said: “It’s all quiet at Al Bakr. The Iraqi port is functioning round the clock.”
The oil deal has the UN stamp of approval and is, therefore, considered safe even as war clouds thicken over Iraq.
Some other tankers are also reported to be docked at the port and crude consignments are being loaded normally. IOC is in the process of hiring another tanker to bring the rest of the consignment.
It has also been making purchases of crude recently from adjoining Kuwait and Saudi Arabia.
“At the moment, it’s business as usual in the Gulf and a lot of the alarm bells on the oil front have been kept ringing by speculators who want to make a fast buck,” the IOC official said.
India imports over 70 million tonnes of crude every year, of which only 2.5 million tonnes come from Iraq.
The basket of Indian crude imports comprises 42 per cent of high-quality Brent crude and 58 per cent of the cheaper Persian Gulf crude, which has a higher sulphur content.
The average price of the Indian basket of crude oil imports has increased steadily from $29.94 per barrel in mid-January to $31.67 per barrel in the second fortnight in February.
Tanker freight rates have been buoyant because of the increased movement of oil as most countries wanted to fill up storage tanks amidst war fears and a three-month-long Venezuela oil strike.
With no oil being available from nearby Venezuela, US companies had to go farther out to the Gulf and Russia to buy, which meant a higher demand for ships as the cargo had to be carried over longer distances.
IOC chairman M.S. Ramachandran is confident that there will be no disruption in oil supplies in the event of a war. He points out that in 1991, when both Iraq and Kuwait had gone out of production, there was no disruption. This time only one country is involved.
India has storage facilities for crude that can last 19 days.