'India is not Europe': Concerns in India Over Purchasing Expensive US Crude

India's state-backed refiners Bharat Petroleum (BP) and Indian Oil Corporation (IOC), as well as private Reliance Industries Limited (RIL) have collectively purchased the highest amount of crude from the US since last May, according to a Bloomberg report.

The West Texas Intermediate (WTI) Midland-variant crude purchased from the US is comparable to Russian Sokol-grade. However, in what appears to be at India's disadvantage, the American crude is being sourced by Indian companies at a higher premium than supplies from the Middle-East.

Last month, the US Treasury sanctioned at least three India-bound shipping tankers carrying Russian oil, reportedly leading to fears among Indian refiners that have exposure to western banks.

US sanctions on Russian oil imports "seem to have had some effect. However, shipments of oil from Russia to India are not expected to drop beyond a point. In fact, as per sources, all major refineries in India have plans to receive Russian crude over the next few months," Brigadier V Mahalingam, an Indian geopolitical analyst, told Sputnik India.

He cited reports that India was using tankers from G7 countries since last month after the US Treasury sanctioned Russian shipping major Sovcomflot.

"In fact, as per data available, 1.1 million barrels per day or 33 percent of total sea borne Russian Exports last month were lifted by tankers flagged, owned or operated by companies based in G-7, EU and other US allies," he stated.

India's monthly crude imports from Russia rose to 32 percent in February, though still below the historic high of 44 percent of overall imports in May 2023.

"I believe, India may seek a bigger discount from Russia for the oil India imports from it as compensation for the cost escalation due to sanctions but overall, the Government is expected to maintain the level of oil purchase from Russia without any major drop in imports from Russia," the Indian Brigadier stated. But "India is not Europe, succumbing to the US pressure. I believe, if [anti-Russia] sanctions go beyond a point, India will act in an appropriate manner," Mahalingam underlined.

Since the G7 sanctions on Russian energy supplies kicked in 2022, the US has captured almost half of Europe's natural gas market from Russia, reports suggest.

US Keen to Become Top Oil Supplier to India

Washington would like to regain its place as a top supplier of crude to India, Seshadri Vasan, the Director General of Chennai Centre for China Studies (C3S) and the Regional Director of National Maritime Foundation (NMF) told Sputnik.

He noted that the US had become a crude-surplus country almost a decade ago. In February 2021, the US had emerged as India's second-biggest oil supplier, accounting for almost 14 percent of New Delhi's overall requirements.

However, the trend was short-lived as India significantly increased its oil imports from Russia since February 2022 after the western sanctions over Ukraine kicked in. Subsequently, in 2023, Russia emerged as India's top crude supplier, a position it continues to hold till this day.

"There is no doubt that the US would like to once again became an energy supplier. Once you become an energy supplier, there is also a tendency to weaponise energy supplies to a certain extent for geopolitical reasons. Becoming an energy supplier also affords a country to have a say in controlling the global fuel prices," explained the Indian think-tanker.

He noted that even though the Indian government has resisted US pressure to tone down energy supplies, Washington would like to have a "reasonable control over the situation so as not to allow an advantage to Russia".

"The effort would be to contain Russia, given the fact that it has overcome the sanctions and recouped its losses on stalled European energy exports by diversting supplies to India and China," Vasan said.

As far as India is concerned, its foremost priority is to ensure energy security by maintaining an adequate volume of Strategic Petroleum Reserves (SPR) to meet any contingency. In this sense, India's policy is aimed at diversifying crude sources.

"If India has been compelled to buy American crude at a higher price, I believe it could be to ensure that the SPR is maintained," Vasan opined.

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US Keen to Become Top Oil Supplier to India