Saudi Arabia offers more crude supplies to India
Saudi Arabia, the world's top oil exporter, has offered additional crude supplies to India, a move that could help Indian refiners replace supplies from sanctions-hit Iran.
Saudi Arabia is the biggest oil supplier to India, the world's fourth-biggest oil consumer, and is the only oil producer with significant spare capacity to replace any fall in supply from its regional rival Iran.
"King Abdullah offered all assistance, including additional supply of crude oil, should India require the same. He expressed eagerness to strengthen relations with India," the Indian government said in a statement on Tuesday.
India's defence minister A.K. Antony is visiting Riyadh to discuss defence cooperation with his Saudi counterpart.
Iran's oil sales to India have been fraught with payment problems in the past 13 months after a clearing mechanism was scrapped, following which Indian refiners have sought alternative supplies.
India is currently paying Iran for the oil through Turkey's Halkbank (HALKB.IS) but fears that route may also succumb to international pressure.
Saudi said last month it can pump more oil at a moment's notice. Oil Minister Ali al-Naimi said Riyadh could increase production by about 2 million barrels per day (bpd) almost immediately.
India has struck a defiant tone over new financial sanctions imposed by the United States and European Union to punish Iran for its nuclear programme, coming up with elaborate trade and barter arrangements to pay for oil supplies.
But India's determination to pursue trade with Iran despite sanctions could be undermined as wary exporters back away from fresh deals following a bomb attack in New Delhi blamed on Tehran, a trade body chief said on Tuesday.
India, Iran's second-biggest oil client after China, buys 12 percent of its oil needs from the Islamic nation, worth about $12 billion annually.
Many refiners across Asia are asking for additional Saudi crude as they seek to reduce their dependence on Iran because of tighter sanctions.
Indian refiners are seeking at least an extra 2.6 million barrels of Saudi crude on top of their contracted supplies for March, sources told Reuters last week.
India's Hindustan Petroleum Corp (HPCL.NS) has reduced the size of annual trade deal with Iran to 60,000 barrels per day (bpd) in 2012/13 versus 70,000 bpd of this year and almost doubled imports from Saudi Arabia.
Another Indian refinery Mangalore Refinery and Petrochemicals Ltd (MRPL.NS) has also doubled its annual crude import deal with the Kingdom.