Iraq has reduced annual supplies of Basra crude oil to several Indian refiners by up to 20% for 2021, industry sources said. Iraq was the top oil supplier to India in 2020 and a reduction in long-term Basra crude supplies could erode Baghdads market share in the worlds third largest oil importer and consumer. Iraqs Oil Marketing Company (SOMO) has reduced the 2021 Basra term volumes to several Indian refiners by between 10% and 20%, the sources said, Reuters reported. "We never expected Iraq to cut volumes. We may have to look for alternatives like tapping the spot markets," said a source at one of the Indian refiners. "This is happening at a time when we are preparing to increase run rates as fuel demand is recovering." SOMO told Indian refiners that it had reduced annual contracts for all Asian buyers to compensate for higher volumes produced in the previous year, one of the sources said. Iraq has been striving to meet its output target under an agreement between the Organization of Petroleum Exporting Countries and allies, including Russia, to limit production and support global oil prices. Baghdad is heavily reliant on oil revenues to support the countrys economy. Iraqi Oil Minister Ihsan Abdul Jabbar said earlier in January that it will stay committed to OPEC decisions and compensate for its overproduction. India on Tuesday complained that recent output cuts by some OPEC countries had created uncertainty for customers and led to a surge in global oil prices. The changes in term supply volumes come as Iraq launched its new sour crude grade Basra Medium in January by splitting existing Basra Light crude production into two grades to improve the quality of its oil. SOMO also exports a third grade Basra Heavy. The sources said SOMO cut term supplies to Indian Oil Corp IOC.NS, the countrys top refiner and its biggest Indian client, by 10% to about 350,000 barrels per day (bpd) for all three Basra crude grades, while the volume for Mangalore Refinery and Petrochemicals Ltd MRPL.NS fell by 17% to 50,000 bpd. SOMO is planning to cut the oil contract of Bharat Petroleum BPCL.NS by about a quarter from last years 100,000 bpd, the sources said, adding that discussions with BPCL were still ongoing as the Indian companys annual contract begins from April. Hindustan Petroleum HPCL.NS, which buys Basra Light oil, has asked SOMO to reduce its term supplies to about 50,000 bpd in 2021, down from about 80,000 bpd in 2020. Iraq has agreed to HPCLs request for lower supplies, while the companies are in talks about additional supply of Basra Medium grade, they said. The annual oil contract for Reliance Industries RELI.NS, operator of the worlds largest refining complex, has also been changed. Reliance will get 33,000 bpd of Basra Medium grade instead of 66,000 bpd of Basra Light, the sources said. The supply cuts to India followed a $2.5 billion oil prepayment deal between SOMO and Chinese state oil trader Zhenhua Oil Corp for 48 million barrels of Basra crude.