india-buying-more-oil-from-us-as-fresh-sanctions-stifle-russian-flows

Indian oil refiners are pivoting towards American crude oil to counter the tightening grip of US sanctions on Russian imports. The enforcement of these sanctions has constricted trade with Russia, forcing Indian processors to seek alternative supply sources.

State-owned Bharat Petroleum Corp. and Indian Oil Corp, alongside leading private refiner Reliance Industries Ltd have collectively procured approximately 7 million barrels of US crude slated for loading in April. If realized, this would mark the highest monthly volume since May, as reported by Kpler, a data intelligence firm.

Following the invasion of Ukraine, Russian crude flows to India surged. However, the subsequent imposition of tighter US sanctions disrupted these flows, narrowing discounts and leaving cargoes stranded. Amidst these challenges, India has increasingly turned to other suppliers, notably Saudi Arabia.

Most of the US crude acquired this month comprises West Texas Intermediate (WTI) Midland, despite its higher delivered cost compared to barrels from the Middle East. Notably, Russia's Sokol oil, a counterpart to WTI Midland, has been severely affected by the disruptions.

Refinery officials in India, highlighted that WTI Midland is preferred for its ability to yield higher volumes of gasoline and diesel, anticipating greater demand for these fuels in the upcoming months due to local elections, increased power generation, and crop harvesting.

Dylan Sim, an analyst at industry consultant FGE, noted, “Given the issues faced with importing Sokol, it’s no surprise that Indian refineries are turning toward US WTI Midland as their light-sweet alternative.”

Although US crude accounted for 10% of India’s imports in 2021, it plummeted to as low as 4% over the past two years as Russia expanded its market share.