Today, India received its first import order of Crude Oil from the US as the Very Large Crude Carrier (VLCC) transporting 2 million barrels of Crude Oil at dock Odisha’s Paradip port. The carrier delivered 1.6 million barrels of ‘US Mars Crude’ and 400,000 barrels of ‘Western Canadian Select’ to the Indian Oil Corporation (IOC).
India is the 3rd largest oil importer in the world and traditionally satisfies its demand for Crude from OPEC countries. Indian refiners seek Heavy Crude Oil with a higher Sulphur grade as it is traditionally cheaper and relatively easier to process in Indian refineries. However, OPEC Cuts forced up prices of heavy crude, forcing India to seek other Oil Exporting Nations like the US.
Earlier this year, American President Donald Trump promised Prime Minister Narendra Modi that America will actively export more energy products to the Indian Subcontinent. In line with policy support, IOC booked the first order with other Indian Refiners including BPCL committing to buy eight shiploads of US Crude Oil by March 2018.
In a move to encourage demand for US Crude, the Indian Ministry of Shipping also granted Indian Refiners special permission and allowed the use of foreign vessels for transporting US Crude to Indian ports as they were only allowed to use Indian vessels for imports previously. PetroChina will be delivering the first shipment of US Crude after it was awarded the tender in July.
Boosting Trade has been on the agenda for Indo-American negotiations as the trade deficit for America has risen to $27 Billion with annual bilateral trade standing at $114 Billion. U.S. Commerce Secretary Wilbur Ross said in September that the trade deficit was ‘a concern for the US’ and that India must open its market to more American companies in the future.