NEW DELHI, 6 April, 2021, (TON): Indian state refiners will buy 36% less oil from Saudi Arabia in May than normal, according to media reports.  

This comes as a sign of escalating tensions with Riyadh even after the Kingdom supported the idea of boosting output from OPEC and allied producers last week. 

India blames cuts by the Saudis and other oil producers for driving up crude prices as its economy tries to recover from the pandemic. 

According to the three sources mentioned in media reports, State-run refiners have placed orders to buy 9.5 million barrels of Saudi oil in May, compared with the previously planned 10.8 million barrels. The refiners; Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd normally buy 14.8 million barrels of Saudi oil in a month. 

The decision to buy less oil was taken on Monday, within two days of a telephone conversation between Indian oil minister Dharmendra Pradhan and his Saudi counterpart Prince Abdulaziz bin Salman on Saturday. 

On Sunday Saudi Aramco, the state oil company of the Kingdom, raised official selling price, or OSP, of its oil for Asia while cutting it for Europe and American markets. 

Tensions between the two countries further escalated after Abdulaziz last month advised India to use the stocks of crude it bought cheaply during the price slump in 2020. Pradhan termed Abdulaziz’s response as “undiplomatic”. 

Energy relations between India, the world's third biggest oil importer and consumer, and Saudi Arabia have soured as global oil prices spiked. 

In India, refiners are facing a tough cash flow situation, an official at one of the state refiners said. 

Asia accounts for more than 60 percent of world oil demand growth. The pandemic has roiled financial markets, with oil crashing by about 60 percent so far this year on track for its biggest quarterly loss ever.