India says low oil prices an opportunity to pursue crude diversification, cut import bill

Easing oil prices on the back of rising supplies will help India cut its oil import bill and encourage the country's refiners to pursue further diversification to maintain a higher level of stocks, said Petroleum Minister Hardeep Puri.

He added that it could also prompt refining companies to cut retail prices to ease the burden on domestic consumers, although the decision lies entirely with the refiners.

"Oil prices are coming down, which is wonderful news. We spend something like $150 billion a year on oil imports. If oil prices come down by 20%, it means we will save $30 billion," Puri told reporters recently.

In May, Platts Dated Brent for May averaged $64/b, declining from previous months -- $73/b in March and $68/b in April. While S&P Global Commodity Insights continues to see weak oil demand in 2025 and 2026, voluntary cuts from eight OPEC+ countries are unwinding.

It is becoming increasingly clear that global oil and liquids production will expand much faster than oil demand. As a result, Platts Dated Brent is expected to moderate to an average price of $63/b for the whole of 2025 under the base-case scenario, down from $81/b in 2024, according to Commodity Insights.

"I see global prices -- and here I am being very careful -- to be in the range of $65/b. My sense is that prices will hold. As supplies are becoming available, prices will be close to $65/b. But if prices go down even more, then oil marketing companies will have headroom to bring retail fuel prices down. But it's a deregulated sector," Puri said.

Growing supplies

Crude oil futures pared gains in midmorning trading in Asia on June 4, as war risk premiums eased amid Russia's lack of retaliation to a large-scale Ukrainian strike, while further pressure came from the Organization for Economic Co-operation and Development's downward revision of global growth.

The front-month ICE Brent and NYMEX WTI contracts rallied to near two-week highs at the June 3 US close, driven by expectations of harsher sanctions curbing Russian and Iranian exports, alongside tightness in the prompt physical market. At 11:57 am Singapore time (0357 GMT), the ICE August Brent futures contract was down 22 cents/b (0.34%) day over day at $65.41/b, while the NYMEX July light sweet crude contract dropped 24 cents/b (0.38%) from the previous close to $63.17/b.

Puri's comments on prices and supplies come as eight countries implementing voluntary crude production cuts agreed May 31 to another accelerated quota hike for July, as they bid to regain market share.

OPEC+ voluntary cutters' quotas will rise by 411,000 b/d in July -- the same level as increases for May and June, OPEC said in a statement. It cited "a steady global economic outlook and current healthy market fundamentals as reflected in low oil inventories" as reasons for the third consecutive accelerated quota increase. Commodity Insights expects sustained output increases to be bearish for oil prices, especially after the summer.

Diversification strategy

"There are enough supplies in the market. Earlier, we were buying oil from 27 countries. Until recently, we were buying from 39 countries. And now we have started buying from Argentina, which makes it 40," Puri said.

In March, state-run Bharat Petroleum Corp. Ltd. received 700,000 barrels of Medanito, a light sweet crude grade from Argentina, adding another emerging producer to India's growing supplier list. Before the BPCL deal, India last bought crude oil from Argentina in 2018, when it received 760,000 barrels from the South American supplier, S&P Global Commodities at Sea data showed.

India's first crude import deal with Argentina in eight years is set to pave the way for more purchases from the South American nation, as both countries intensify talks to boost energy ties, with New Delhi increasingly eyeing new and non-OPEC suppliers to expand its sourcing network, according to government sources.

Puri added that domestic reforms in the oil sector are expected to cut import dependency in the future and that the government is encouraging domestic exploration.

"India is tapping into untapped oil reserves by opening new offshore areas for exploration. Drilling is not easy - onshore wells cost around $4 million, offshore up to $100 million. With global examples like Guyana as inspiration, India is preparing for a major energy shift," Puri added.

He said that India had increased the explored area of the Indian sedimentary basin from 6% to 10% in the last decade and that this would soon reach 15%.

India has been witnessing some recent exploration success. State-run Oil and Natural Gas Corporation Ltd. and Invenire Energy group companies have recently commenced oil and gas production from the PY-3 field in the Cauvery Basin, marking the revival of output from this field after a 14-year hiatus. In addition, state-run Oil India Ltd has started gas production from the Bakhritibba Discovered Small Field block in Jaisalmer district in western Rajasthan.