Indian Oil Opts for Mideast Crude Over US Supply: Sources

Swift Summary

• Indian Oil Corporation (IOC), India’s top refiner, skipped purchasing U.S. oil in its latest tender.
• Rather, IOC acquired 2 million barrels of West African crude (Nigerian grades Agbami and Usan) from TotalEnergy and 1 million barrels of Middle Eastern Das crude from Shell.
• Nigerian oil was bought on a free-on-board basis, while Das crude was purchased on a delivered basis for shipment to India in late October to early November.
• In its previous tender last week, IOC had purchased 5 million barrels of U.S. West Texas Intermediate (WTI) crude via arbitration-driven possibility.
• Recent purchases of U.S. oil have helped reduce India’s trade surplus with the United States amidst rising tariffs linked to New Delhi’s Russian oil imports.
• Despite the Brent-WTI price differential being favorable at $4 per barrel, landed costs for U.S. crude remained higher compared to other grades.

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Indian Opinion Analysis

Indian Oil Corporation’s strategic pivot away from U.S.-sourced crude reflects multiple economic considerations such as high landed costs compared to alternative grades from Africa and the Middle East. Buying Nigerian and Abu Dhabi oils instead suggests that cost efficiency continues to guide procurement decisions amid volatile trade dynamics with major partners like the United States.

Emerging context around tariffs-like Washington doubling duties citing increased Russian purchases-signals potential geopolitical ripple effects over India’s expanding role in global energy markets. While diversifying sources helps insulate against dependency risks, reduced imports from lower-cost suppliers like Russia could impact broader fiscal sustainability against tariff regimes placed by trading allies such as the US.

Long-term implications may necessitate balancing geopolitical partnerships while securing economically viable energy supplies-a challenge for policymakers navigating turbulent trade relations without compromising domestic affordability or industrial growth objectives.