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India: Newest outpost for U.S. Crude Exports

Indian refineries are on the look out to increase purchases of crude from outside the Middle East and they are testing both U.S. sweet and sour crudes in their facilities, a common practice when importing crude from new sources.

“A lot of these (Indian refiners) want to see what it’s like if they run it,” said one Houston-based oil broker. “They want to get a taste of U.S. crude.”

Those refiners are taking advantage of a wide spread between U.S. oil and other global benchmarks, which has created an attractive discount on American crude grades.

After the meeting in June of PM Modi and US President Donald Trump wherein energy exports was discussed, Indian govt has been promoting more crude imports by waiving some shipping requirements. In fact, Indian refiners Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corporation Limited were given a special permission by the shipping ministry to import oil from the United States until March.

After assessing U.S. crude as a replacement for Nigerian barrels, Hindustan Petroleum Corp Ltd made its first purchase of U.S. oil in September.

According to Eikon shipping data, one supertanker has already discharged about 2 million barrels in India earlier this month and two more with a total of 3 million barrels are expected to arrive in November.

Prior to this, U.S. crude rarely went to India, with only one month this year – February – showing deliveries, according to U.S. EIA data through July.

In August, IOC bought 950,000 barrels of light sweet Eagle Ford shale oil and 950,000 barrels of heavy sour Mars crude for end-October delivery from trading firm Trafigura. In October the company bought 1 million barrels each of U.S. Southern Green Canyon (SGC) and WTI Midland crude.

In October, India’s Reliance Industries Ltd, the world’s largest refining complex, purchased 1 million barrels of Midland and a similar-sized cargo of Eagle Ford crude for November delivery.


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