For the first time, Indian Oil Corp. (IOC), a state-owned company and India’s biggest refiner, added Mexican heavy Maya to its crude mix. This unprecedented event came in response to recent sanctions on Iranian oil imports, on which IOC used to rely, imposed by the United States and Europe to halt Iran’s nuclear programme. Even though Iran has long been the second source of India’s oil imports after Saudi Arabia, it could be argued that if heavy Maya gives a better yield then IOC could start looking at buying Mexican oil on a regular basis.
Even though this is the first time an Indian state refiner has purchased Maya crude, it is not the first time that Mexican oil has entered the country, as it is already being processed by the two Indian private refiners, Reliance Industries and Essar Oil.
In addition to the Mexican variety, IOC also started buying 20,000 bbl/day of Azeri light crude from Azerbaijan. The NOC’s diversification strategy comes mainly as a result of the European and American ban on Iranian oil and the extended pressure on south Asian countries such as India to cooperate in bringing back Iran to the negotiating table, but also to India’s intent to raise its refining capacity from 4.3 million bbl/day to 6.22 million bbl/day by 2016. This pressure on Asian countries was stepped up with the visit of US Secretary of State Hilary Rodham Clinton, who visited the eastern Indian city of Kolkata and spoke to officials about cutting off Iranian oil, with the threat of possible sanctions from the United States acting as incentive to cut imports from Iran by 11%, as announced today.
Iran currently has several buyers for its oil production, including China, South Korea, Turkey and South Africa, despite international pressure to stop trade with the state. This raises questions about the potential for increasing Mexican crude exports to other parts of the world, thus decreasing dependence on the US as an export destination, and perhaps bringing unforeseen consequences to the US as a direct result of their interventionist policy regarding Iran.