Bloomberg news agency recently reported that Indian oil refineries are increasingly buying crude oil from the US. The reason is that the West is enforcing stricter sanctions on Russia’s oil industry, which has disrupted trade with Russia and forced oil processors to seek alternative sources.
This month, two Indian state-owned oil companies, Bharat Petroleum Corp. and Indian Oil Corp., along with private oil producer Reliance Industries Ltd., purchased a total of 7 million barrels of crude oil from the US for delivery in April. According to data from oil data monitoring company Kpler, this is the largest monthly volume of oil purchased since May last year.
According to Indian traders, most of the US crude oil purchased this month is WTI Midland crude. The shipping cost for this type of cargo is higher than that of oil purchased from the Middle East. However, Russia’s Sokol crude, a competitor to WTI Midland, has been heavily affected by the sanctions.
India increases purchase of US crude oil as supply from Russia faces difficulties (Illustrative image: Bloomberg)
An official from an Indian oil refinery company said WTI Midland can produce more gasoline and diesel, as India’s fuel consumption is expected to increase in the coming months due to the country’s election season, increased power generation, and harvest season.
Other types of Russian crude oil, including Urals crude exported from the country’s western ports, have also been affected by stricter enforcement of sanctions. Two tankers carrying this type of oil have been inactive off the coast of India for several weeks.
Russian crude oil has flowed into Indian ports since the conflict in Ukraine, with the advantage of high discounts. Kpler data shows that in February, India imported about 40 million barrels of Russian crude oil, accounting for 30% of India’s total oil and condensate imports. On average in 2023, Russian oil accounted for 39% of the market share in India.
US crude oil once accounted for 10% of India’s imports in the 1.4 billion population market in 2021. However, this commodity has since declined to 4% market share in the past 2 years as large quantities of Russian oil have been imported.
