Bloomberg news agency recently reported that India’s oil refineries are increasingly buying crude oil from the US. The reason is that the West is imposing stricter sanctions on Russia’s oil industry, which has disrupted trade with Russia and forced oil processors to seek alternative sources.
This month, two state-owned Indian 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 US crude oil to be delivered in April. According to Kpler, a company specializing in crude oil data, 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 transportation cost for this type of cargo is higher compared to oil purchased from the Middle East. However, Russia’s Sokol crude, which could compete with WTI Midland, is heavily affected by sanctions.
India increases purchase of US crude oil as Russian supply faces difficulties (Illustrative image: Bloomberg)
An official from an Indian oil refinery said that WTI Midland can produce more gasoline and diesel, given the expected increase in fuel consumption in India in the coming months to serve the country’s election season, increased electricity production, and harvest season.
Other Russian crude oils, including Urals crude exported from ports in the western part of the country, are also affected by stricter sanctions. Two oil tankers carrying this type of crude have been inactive off the coast of India for several weeks now.
Russian crude oil has been flowing into India’s ports since the conflict in Ukraine broke out, with the advantage of high discounts. Kpler data shows that the amount of Russian crude oil that India imported in February was about 40 million barrels, accounting for 30% of India’s total oil and condensate imports. On average, Russian oil accounted for 39% of India’s market share in 2023.
US crude oil used to account for 10% of India’s imports in the country’s market of 1.4 billion people in 2021. However, this share has decreased to 4% in the past two years as large volumes of Russian oil have been imported.
