The temporary return in 2000 of the once key Asian buyer has put a tightsqueeze on an already snug market, they said.

IOC, which closed its second tender to buy January/February diesel onThursday on the back of domestic refinery woes, has received very few butvery high offers, traders said.

"India has come into the market at a very, very wrong time," one trader witha European oil company said.

"The market is very tight, not a lot of people can offer. The few who cansqueeze barrels out would demand very high prices."

Only a handful of traders offered into the tender at around $4.00 per barrelpremiums and above to India's formula price, which is a 50-50 mix ofSingapore and Middle East spot free-on-board prices.

It had sought 30,000 to 45,000 tonnes cargo offers for delivery betweenJanuary 26 and February 15 into East and West coast Indian ports.

The names of companies that offered into the tender were not clear, buttraders estimated that they would include BB Energy, Vitol and Glencore.In IOC's last tender for deliveries January 16-23, only four sellers - BBEnergy, Vitol, Glencore and Shell - offered into the tender.

They were each awarded one 30,000 or 40-45,000 tonne cargo.

"If you had sweated it out with 0.25-per cent diesel, then it's boom time,"one trader said. The award, at around $2.20 to $3.25 per barrel premium tothe formula, depending on which delivery ports, came up to nearly twice asmuch as the prices India had paid when it tendered regularly up to late1999.

So if India accepts the latest offers, it will be paying record levels,although it only became a regular buyer of 0.25-per cent sulphur grade lastyear. The current urgent demand is estimated at around 200,000 tonnes permonth for January and February, just a fraction of its former purchases,traders said.

The government bought on average around one million tonnes of diesel permonth last year but had not imported any since October after a surplusdeveloped in the domestic market following the start-up of the huge540,000-bpd Reliance refinery.