Middle East benefits from India’s economic boom

…For the last few years, India’s production of crude oil has been stable at about 700,000 barrels per day similar to that of Oman. According to the Association for the Study of Peak Oil (ASPO), India’s production of oil will decline to 500,000 b/d by 2010 and to 330,000 b/d by 2020. On the other hand, India s consumption of crude oil is now probably over 2.5 million barrels per day and rising. The difference is met by imports, making India one of the largest importers of oil in the world. In the fiscal year 2004/05, India imported 105 million tons of crude oil and petroleum products at a cost of $29.8 billion a 45 per cent increase over the bill for the previous year.

Since 2000, India has stopped publishing data on the sources of its oil imports. In the fiscal year 1999/2000, the largest suppliers were Nigeria, Saudi Arabia, UAE, Kuwait and Iran, and the Middle East provided about 65 per cent of India’s oil imports.
Today, Saudi Arabia remains a major supplier, and although the UAE, Kuwait and Iran do not disclose the direction of their oil exports, it could reasonably be assumed that India remains one of their most important customers. We estimate that, including crude oil and petroleum products, India’s imports from the Middle East increased from $5.4 billion in fiscal year 1996/97 to approximately $27.5 billion in fiscal year 2004/05. In the other direction, India has become a substantial and increasingly important exporter to the Middle East. India’s exports to the region increased from $3.0 billion in 1996/97 to $12.0 billion in 2004/05. Within the region, the UAE is by far the most important destination, receiving Indian exports worth $7.1 billion in 2004/05. India’s exports to the Middle East are diverse, but with a preponderance of manufactured goods, especially jewellery and precious metals.

Overall, India appears to have a sizable and increasing trade deficit with the Middle East, currently of the order of $15 billion a year.

Khaleej Times