Refiners in the third-biggest oil importer are snapping up more cargoes from outside the Middle East after India’s government urged them to diversify suppliers with the OPEC+ alliance keeping a tight rein on output.
Local processors are adding new grades and lifting more U.S. oil to pare their reliance on the Middle East, the nation’s traditional supplier. HPCL-Mittal Energy Ltd. became the first Indian buyer of Guyanese oil, while Mangalore Refinery & Petrochemicals Ltd. has booked a shipment of Brazil’s Tupi for the first time.
While expanding energy demand makes it imperative for India to widen its pool of crude sources, the surprise decision earlier this month by the Organization of Petroleum Countries and its allies to extend supply curbs irked the government as prices spiked. India, which imports about 90% of its oil requirements, has seen record pump prices this year. That’s an extra burden as the economy takes a heavy hit from the coronavirus pandemic.
Indian purchases from the U.S. more than doubled in January on-month, government data show. The country’s sophisticated refineries can process almost every kind of crude, allowing them to be more adventurous in sourcing.
“Indian refiners on the whole have been quite progressive in diversifying their crude basket over recent years,” said Vandana Hari, founder of Vanda Insights in Singapore. “While there may be some political capital right now in advertising the continuing diversification, the fact is it was an ongoing process and will remain so, for commercial reasons.”
Brent crude, which spiked above $71 a barrel earlier this month after the OPEC+ decision to maintain supply curbs, was at $62.71 on Wednesday.
(Adds Brent price in final paragraph)