India Urges Refiners to Boost US and Venezuela Crude Oil Imports Post Trade Deal
Days after India and the United States announced a significant trade agreement, the Indian government has reportedly directed state-run oil refiners to evaluate increasing crude oil purchases from the United States and Venezuela. This move comes as US President Donald Trump has removed the 25% tariffs previously linked to India's purchases of Russian crude oil, though the executive order allows for potential reimposition if India continues buying from Russia.
India has emphasized that its energy security will drive all purchase decisions, with a strategy focused on diversifying its crude oil basket and procuring at the best available rates in international markets. According to a Bloomberg report, refiners have been encouraged to prioritize US crude grades in spot market tenders and consider Venezuelan crude through private negotiations with traders.
Practical Constraints and Economic Feasibility
However, practical limitations may hinder large-scale replacements of existing supplies. US crude is typically light and sweet, with lower sulphur content, while many Indian refineries are configured to process medium-grade crude. Additionally, pricing considerations play a crucial role, as higher transportation costs for long-distance shipments from the US reduce competitiveness.
Industry executives have expressed concerns about the economic feasibility of significantly expanding US imports in the near term. Indian refiners have access to cheaper alternatives from regions like West Africa and Kazakhstan, which benefit from shorter shipping routes.
Potential Import Volumes and Current Purchases
Refinery officials indicate that Indian processors could potentially import around 20 million tonnes of US crude annually, equivalent to about 400,000 barrels per day. This would surpass last year's volumes, estimated at 225,000 barrels per day by Kpler.
Meanwhile, the Trump administration has appointed major trading firms Vitol Group and Trafigura Group to market Venezuelan crude after asserting control over Venezuela's energy sector earlier this year. Indian buyers, including state refiners like Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp., have already acquired around 4 million barrels of Venezuelan oil.
Refinery executives note that this volume is near the maximum quantity of heavy, sour Venezuelan crude that state refiners can process monthly, given existing technical limitations. The push for diversification reflects India's broader energy strategy amid global trade dynamics and geopolitical considerations.
