In a bold move to diversify its energy supply sources, India‘s largest refining company is abandoning American oil as part of its updated business strategies. The Indian Oil Corporation, the country’s leading refining entity, announced its decision to forgo purchasing American oil in its recent tenders, opting instead for crude from West Africa and the Middle East. This decision is part of India’s efforts to secure energy for its population of over 1.4 billion and to strengthen its trade relations with alternative sources.
Tender Details
According to sources in the oil sector, the Indian Oil Corporation purchased two million barrels of West African crude along with one million barrels from the Middle East, reflecting a strategic shift in its approach. Reports indicate that the state-owned company acquired one million barrels each of Nigerian Agbami and Usan crude from TotalEnergies and another million barrels of Das crude from Shell.
Purchase History
The deal for the Nigerian oil was based on a delivery-on-board (FOB) agreement, while the company agreed to receive the Das crude upon its arrival at Indian ports in late October and early November. Notably, the corporation had previously secured five million barrels of West Texas Intermediate (WTI) crude in a tender just a week earlier.
Impact on the Indian Economy
Over the past few months, Indian refineries have benefited from price movements in the markets, increasing their purchases of American oil through tenders. However, the decision by India’s largest refining company to abandon American oil has significant implications; these purchases had helped reduce India’s substantial trade deficit with the United States, especially after tariffs on Indian imports were raised to 50% amid concerns over India’s purchase of Russian oil.
India’s Future Vision
Providing energy for over 1.4 billion citizens is of utmost importance to India. Vinay Kumar, India’s ambassador to Moscow, confirmed that the country will continue to buy oil from sources that offer the “best deal.” New Delhi described the U.S. decision to impose tariffs on India as “unfair and unjustified,” as India continues to rely on Russian crude amid American and European pressures. Statistics indicate that India’s imports of Russian crude have seen a significant increase since the onset of the war in Ukraine, accounting for between 35% to 40% of total imports in 2024, compared to just 3% in 2021.