Shifting Energy Ties: India's Rising US Oil Imports Amid Russian Supply Constraints

Key Highlights:

1. Bitumen & Lubricant Prices: VG30 and VG40 prices vary across regions, with Kandla offering the most competitive rates, while lubricant prices in Bhiwadi remain stable.

2. Crude Oil Import Shift: Russian crude exports to India dropped by 25%, prompting refiners to increase imports from the US and the Middle East.

3. Geopolitical Influence: US diplomatic efforts and sanctions on Russia are reshaping India’s oil trade, pushing refiners to diversify supply sources.

4. Long-Term Energy Strategy: India is securing stable crude supplies through agreements like ADNOC Gas’ 14-year LNG deal with Indian Oil Corporation.

Bitumen & Lubricant Price Trends Across Key Markets

• In the Indian bitumen market, VG30 and VG40 prices vary across locations, with Vadodara listing VG30 at ₹47,352/MT and VG40 at ₹50,272/MT, while Haldia prices stand slightly higher at ₹48,352/MT and ₹51,152/MT, respectively. 
• In contrast, Kandla offers the most competitive rates, with VG30 priced at ₹38,300/MT and VG40 at ₹39,200/MT. 
• Meanwhile, in the lubricants segment, LubriEdge-branded hydraulic and gear oils in Bhiwadi are priced as follows: 
  1. Hydraulic Oil 68 at ₹87.00/LTR
  2. Hydraulic Oil HLP46 at ₹95.00/LTR
  3. Gear Oil 150 at ₹115.00/LTR
  4. Gear Oil 220 at ₹120.00/LTR
  5. Gear Oil 320 at ₹125.00/LTR
  6. Gear Oil 460 at ₹130.00/LTR
• All available in barrel packaging.

India’s Evolving Crude Oil Imports: Shifts & Strategies

• India’s crude oil import dynamics have witnessed a significant shift in February, with US exports nearly doubling while Russian shipments declined. According to energy cargo tracker Vortexa, India-bound crude oil loadings from Russian ports dropped from 1.4 million barrels per day (mbd) in January to 1.07 mbd in February, reflecting a 25% decline. 
• The reduction in Russian supply is primarily driven by the impact of US-imposed sanctions, which have unsettled the India-Russia oil trade. Indian refiners have responded by increasing their procurement from alternative sources, particularly the US and the Middle East.
• Crude oil shipments from the US to India saw a sharp rise, reaching 0.2 mbd in February from 0.11 mbd in the previous month, highlighting India's strategic move to diversify its supply base. 
• This shift aligns with India’s broader policy of reducing dependence on any single supplier and mitigating risks associated with geopolitical tensions. 
• Meanwhile, crude loadings from the Middle East have also increased, with Saudi Arabia supplying 0.91 mbd (up from 0.77 mbd) and Iraq increasing its shipments to 1.08 mbd (from 0.8 mbd). 
• However, the UAE’s exports to India saw a decline, dropping from 0.48 mbd in January to 0.31 mbd in February.
• A key factor influencing India’s decision to raise US crude imports is Washington’s diplomatic push for energy trade balancing. The Indian government has committed to increasing its energy procurement from the US by two-thirds to $25 billion, following discussions between Indian Prime Minister Narendra Modi and former US President Donald Trump. 
• This shift also underscores Washington’s strategic objective of positioning India as a counterbalance to China in the Asia-Pacific region while strengthening its energy ties with key Middle Eastern producers.

Petroleum News: Global Sanctions & India’s Energy Realignment

• US sanctions on Russian crude exports have significantly disrupted trade flows, forcing Indian refiners to seek alternative suppliers. The January 10 sanctions have made transactions with sanctioned Russian entities riskier, with buyers facing a March 12 deadline to settle existing deals. 
• Given these constraints, Indian refiners have turned to the US and Middle East to secure stable crude oil supplies.
• The recent surge in US crude exports to India is a testament to Washington's broader energy policy, which aims to leverage geopolitical advantages while bolstering its own oil sector. Furthermore, the US has been actively deepening its energy ties with the UAE, another major supplier to India. 
• A landmark agreement between ADNOC Gas and Indian Oil Corporation (IOC) was recently signed, securing a 14-year supply of up to 1.2 million metric tonnes per year (mtpy) of LNG. This move aligns with Washington’s strategy to reinforce energy linkages between India and the UAE while countering China’s growing influence in the Middle East.
• The shift in India’s energy sourcing also aligns with Washington’s vision of reshaping the global energy market. The US aims to reduce Russian crude exports, leaving India and other key consumers with fewer options. With India projected to become the world's third-largest energy consumer by 2030, securing long-term energy partnerships is crucial.

Expert Opinion: Future of India’s Crude Oil Strategy Amid Geopolitical Uncertainty

• Market analysts expect India’s crude oil import strategy to continue evolving in response to geopolitical shifts and policy decisions. The increased dependence on US and Middle Eastern crude is likely to persist, especially if sanctions on Russia remain stringent. 
• However, Indian refiners will likely maintain a balanced approach by securing diversified supply chains. In the short term, US crude exports to India are expected to remain strong, while Middle Eastern producers may adjust their output to cater to the rising demand from Indian refiners.