India Cuts Crude Import from Saudi Will It Impact the Sulphur Market

New Delhi: In recent developments, the Indian authorities have decided to loosen their dependency on Crude imports from Saudi Arabia and are keen to invest more in supplies from the USA and Nigeria. Several geopolitical analysts indicated a significant blowback after Saudi Arabia decided to lift the OPEC Crude Basket price for the APAC countries. It is also conceived as retaliation after India asked the Saudi Kingdom to increase crude production as it keeps the Crude Oil prices under control and helps the developing economies recover from the losses endured due to COVID-19, for which the Saudi counterpart advised India to use the stocks of Crude it bought at cheaper rates during the price slump in 2020. India termed such a response "undiplomatic."

Despite higher shipping costs and delivery delays of at least 35 days longer than Saudi Arabia, India decided to purchase WTI Crude from the United States after conducting feasibility and geopolitical analysis. Furthermore, a concern arises because a significant portion of Indian Sulphur is derived from crude oil. It is known that the WTI consists of 0.34% Sulphur content against the 1.77% Sulphur in the OPEC Crude basket. Now the question is, will it have an impact on Sulphur prices in India, given that the world is on the verge of a severe food crisis and the FAO food pricing index has shown a consistent increase? The Indian authorities are struggling to ensure the supply of fertiliser in the upcoming Kharif season. Several market factors, including the global surge in inflation, have had an impact on the complete value chain across the Asia Pacific region. Still, in contrast, numerous reciprocating factors also nullify the chances of a steep surge in the Sulphur prices, such as Indian players placing orders for the Russian Ural. In addition, several reports indicated that the import of Crude Oil from Russia would cross the 15 billion barrel mark in 2022, coupled with the Indian authorities' decision to provide fertilizer subsidies ahead of the upcoming Kharif season.

As per ChemAnalyst, the present situation related to Sulfur production based on Crude Oil will likely observe a significant plunge. Still, the inventories of the Russian Urals coupled with the Surplus domestic inventories of Sulphur will likely lay off a little to negligible impact on the Sulphur quotations utilized in the Fertilizers industry.