India's US crude imports surge nearly 100% on renewed energy diplomacy, China tariffs

India has doubled its crude purchases from the US, as higher availability of cargoes due to sluggish purchases by China and other buyers has opened a window of opportunity for Indian refiners to diversify imports.

The changing global economic scenario, tariffs and relatively lower global crude oil prices are not only helping India to boost energy ties with the new US government, but have also given a chance to New Delhi to work towards bridging the trade deficit with Washington -- an area of concern for US President Donald Trump.

"India has shown strong interest in US crude purchases, as refiners adjust their strategies in response to China slowing WTI Midland imports due to tariffs. However, it remains uncertain whether Indian refiners can accommodate more of the lighter US crude grades without lowering their run rates or sourcing heavier crude for blending," said Benjamin Tang, head of liquid bulk at S&P Global Commodities at Sea.

Indian imports of US crude averaged 247,000 b/d in January-April of this year, nearly 100% higher than 124,000 b/d in the same four-month period in 2024, according to CAS data. Among the latest shipments, VLCC Blue Nova loaded 2.05 million barrels of WTI from Corpus Christi on May 2 and is expected to arrive in Sikka by mid-June.

US crude shipments to China were 60,000 b/d for the same four-month period, down 56% from the same period in 2024. US crude flows to China have dried up mainly since February, although some relatively minor volumes continued to flow in during March and April.

Renewed energy diplomacy

Analysts and industry sources told Platts, part of S&P Global Commodity Insights, that Indian Prime Minister Narendra Modi's visit to the US in mid-February and the two world leaders' pledge to boost energy ties have started to yield results.

"With President Trump back in office, the US has intensified efforts to position itself as India's leading energy supplier, focusing on both crude and LNG exports. The administration is prioritizing energy trade as a cornerstone of US-India relations, probably offering competitive pricing considering the freight disadvantage. While US crude remains a strategic option, logistics and shipping costs will be key factors in determining its competitiveness in India's crude basket," said Shrikant Madhav Vaidya, former chairman of Indian Oil Corp.

Despite the US implementing a 90-day pause on its reciprocal tariffs for most countries, the baseline 10% tariff applicable to all nations with a trade deficit with the US has introduced uncertainty in the market. However, India is anticipated to be less affected than other emerging Asian economies. This is attributed to the accommodative monetary and fiscal policy support, according to Commodity Insights forecasts.

From the beginning of 2025 until May 2, Platts Dated Brent averaged $73/b, down from $81/b in 2024.

Looking ahead, Commodity Insights projects global oil liquids demand growth will be only 0.8 million b/d -- a sharp downward revision from the previous round of forecasts, while global supplies remain plentiful. In addition, OPEC+ agreed on May 3 to increase production by 411,000 b/d in June, on top of May production increases.

Looking ahead, under the base-case scenario, Platts Dated Brent is expected to moderate to the mid-to-upper $60s/b for the whole of 2025. Furthermore, this trend is expected to continue into 2026, with the average price projected to be in the mid-$60s/b.

Implications for the Middle East

Refining sources and analysts said that easing crude prices in recent months had made it easier for India to ship in incremental cargoes from the US despite relatively higher freight levels compared with Middle Eastern cargoes. This could pressure official selling prices in the Middle East in the coming months.

"Indian state refiners have been in the pursuit of widening their basket of crude oil grades for diversification and supply security. With US flows to India rising, it will also help to keep OSPs from conventional sources like the Middle East in check," said DLN Sastri, oil refining and marketing director at the Federation of Indian Petroleum Industry.

Saudi Aramco has raised the Asia-bound June official selling price differentials for its crude grades by 20 cents/b from May, according to a notice from the producer late May 5. Aramco set the June OSP differential for its flagship Arab Light at a premium of $1.40/b to the Oman/Dubai average, up 20 cents/b month over month, compared with market expectations of an increase of 10-40 cents/b.

"Even during Trump's previous era, the oil and natural gas imports were higher. Combination of some lighter US crude grades and heavy grades like Mexican and Venezuelan grades used to be a viable option then, but Venezuelan grades are now missing due to current geopolitics," he added.

In 2024, India witnessed a shift in its crude oil sourcing pattern. Imports from the Middle East took a bit of a hit, while Russian crude stepped up, making up around 35% of the total imports, which reached about 4.9 million b/d. Although India continued to receive smaller volumes from regions such as Latin America and Africa, the Middle East and Russia combined accounted for nearly 80% of India's crude imports.