In the LOOP: US crude exports to India reach record 261,000 b/d in June

In a signal that Indian refineries are increasing their efforts to find alternatives to Iranian barrels, a record 261,000 b/d of US crude was exported to India in June, according to the latest US Census Bureau data.

The amount of crude flowing from the US to India has spiked sharply this year from an average 29,000 b/d in January through April to 152,000 b/d in May and then 261,000 b/d in June.

There are indications that the increase in flows of US crude to India will continue into the fall as renewed US sanctions on Iran will put pressure on importers of Iranian crude.

Iran is the third biggest source of oil for India, importing some 160 million barrels each year. However, once US sanctions against Iran kick in on November 4, India may be forced to ramp up its efforts to seek alternatives.

State-owned Indian Oil Corp. signed a deal in July to buy 6 million barrels of US crude that will be shipped on three VLCCs -- one each for delivery in November, December and January.

In another deal, the fifth VLCC to load at the LOOP terminal this year is expected to arrive in India in September, according to data supplied by S&P Global Platts' cFlow trade flow software.

The 2 million-barrel crude cargo set sail from LOOP on August 13 is set to arrive in Kochi, which is an indication state-owned Bharat Petroleum Corp. may have bought it.

The 310,000 b/d Kochi refinery is located in the southern Indian state of Kerala and is one of BPCL's two refineries.

In addition to the VLCC cargoes heading for India, US shipping sources say they also have seen increased interest in the fixing of US Gulf Coast to India cargoes on Suezmax vessels, which carry about 1 million barrels of crude.

A US crude trader said the smaller cargo sizes may indicate that new buyers are testing crude grades and have yet to commit to buying an entire VLCC.

Similar "tests" by South Korean buyers of US crude and condensates have recently been observed.

In addition to the uncertainty around US-Iran sanctions, there also have been trade tensions between the US and China. But other buyers have stepped in to purchase US crude after China halted imports.

US crude exports to China were virtually non-existent for the week that ended August 10, according to cFlow data, compared with 1.076 million barrels in the week that ended August 3.