Public sector refiners in India might pursue a smaller purchase deal of oil from Saudi Arabia in the coming year to compel the latter to modify certain contractual terms that they deem as ‘unfavourable’.
One of the persons in the know told Economic Times that there should be further flexibility in the contracts given that it promotes monopoly of the seller in the current circumstances.
To give an example, the individual said, “We can’t take more when the prices are low, nor can we order less when prices rise because orders are placed so much in advance and there are certain broader monthly commitments.”
He claimed that the refiners desire flexibility in terms of prices and a guarantee of supply even during times when production levels fall due to some reasons.
As of now, Saudi is allowed to reduce supplies given that the Organization of Petroleum Exporting Countries (OPEC) decides to artificially increase the prices by cutting down the production.
On the other hand, the buyers are bound to the extent that they have to place their loading plans for May by 5 April itself. State refiners are now looking to share industry intelligence with their private counterparts and collectively negotiate their purchase terms with the suppliers.
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