The Indian oil refineries are increasingly buying more crude oil from the United States, according to Bloomberg. This is due to the tighter Western sanctions on Russia’s oil industry, which have disrupted trade with Russia and forced the refineries to seek alternative sources of supply.
During this month, state-owned Indian oil refiners Bharat Petroleum Corp. and Indian Oil Corp., along with Reliance Industries Ltd., a private oil producer, have purchased a total of 7 million barrels of crude oil from the United States for delivery in April. According to Kpler, a firm that tracks crude oil data, this is the largest monthly volume of crude oil purchased since May last year.
According to Indian traders, most of the crude oil purchased from the United States this month is WTI Midland crude. The transportation costs for this type of crude are higher compared to oil imported from the Middle East. However, Sokol crude from Russia, which could be a competitor to WTI Midland, has been heavily impacted by the sanctions.
India increases purchases of US crude oil due to supply difficulties from Russia (Photo: Bloomberg)
An official from an Indian oil refining company stated that WTI Midland crude can produce more gasoline and diesel, which is expected to meet the increased demand for fuel in India in the coming months due to the upcoming elections, increased electricity generation, and harvest season.
Other Russian crude oil varieties, including Urals crude exported from western ports, are also affected by the tighter sanctions. Two tankers carrying this type of crude have been inactive off the coast of India for several weeks.
Russian crude oil imports to India have surged since the conflict in Ukraine, fueled by high discounts. Kpler’s data shows that in February, India imported around 40 million barrels of Russian crude oil, accounting for 30% of India’s total imported oil and condensate. On average, in 2023, Russian oil accounted for 39% of India’s market share.
In 2021, US crude oil accounted for 10% of India’s total oil imports in the 1.4 billion population market. However, this share dropped to 4% in the past two years as large quantities of Russian oil were imported.
