India has increased its oil purchases from Russia as well as from the United States. Taking advantage of the Trump administration's tariff policies and the lower prices, Indian refineries are focusing on American crude oil. Imports from the US increased by 114% in the June quarter. This will help India reduce costs and narrow its trade deficit.
India increased oil purchases: India has recently stepped up its crude oil purchases from the United States, in addition to Russia. Following the tariff pressure from Trump and the opening of an arbitrage window, Indian refineries are importing American crude oil. In the June quarter, India's US oil imports increased by 114% compared to last year, although Russia remains the largest supplier. Companies like IOC, BPCL, and Reliance have purchased American barrels in large quantities. This move is part of India's efforts to diversify its energy reserves, secure cheaper supplies, and reduce its trade deficit with the United States.
Why purchases from the US increased
Indian refineries have significantly turned towards American oil in the June quarter. Crude oil purchases from the US have increased by 114 percent this time compared to last year. In the month of June, India imported approximately 4.55 million barrels per day of crude oil. While Russia held the largest share, the US also secured an 8 percent share. The reason for this is that American crude oil prices have become competitive for Asian markets. This is why many Asian countries, including India, have accelerated their oil purchases from the US.
Companies have increased orders
Under this shift, Indian companies have placed large orders from the US. Indian Oil Corporation (IOC) purchased five million barrels, Bharat Petroleum Corporation (BPCL) purchased two million barrels, and Reliance Industries purchased two million barrels of oil from Vitol. Additionally, European companies such as Gunvor, Equinor, and Mercuria have also supplied American oil to Indian companies.
Purchases from Russia continue
It is noteworthy that despite increasing purchases from the US, India has not reduced its oil imports from Russia. Russia still remains India's largest supplier. The prices of Russian oil are also attractive for Indian refineries. India is finding relief in meeting its energy needs due to the discounted oil available from Russia. However, given the increasing pressure from the US, India has also started emphasizing American oil to maintain a balance.
Not just the US and Russia, but India is now also focusing on crude oil purchases from other countries. BPCL recently made its first purchase of Utahpet crude from Nigeria. This indicates that India is adopting a strategy to diversify its oil reserves. By purchasing different grades of oil, India aims to strengthen its energy security.
US Pressure
The US has pressured India regarding its oil purchases from Russia. Furthermore, by increasing tariffs by up to 50 percent, India has been signaled that it needs to increase its purchases from America. In such a scenario, India has chosen a balanced approach. While continuing to buy cheaper oil from Russia, it is also importing sufficient quantities from the US. This strategy will reduce India's trade deficit and maintain better relations with both countries.
New Window Opened in Asia
An arbitrage window has essentially opened up in Asian markets for American crude oil. This means that the prices here have become so attractive that buyers are benefiting. Refineries in many Asian countries, including India, are taking advantage of this opportunity. This is also important for India, as the country, being the world's third-largest oil consumer, constantly needs to meet its energy requirements.
