India’s largest oil refiner Indian Oil Corp (IOC) has signed a mega $1.5 billion deal with the US for importing 60,000 barrels of crude oil a day from this year to March 2020.
In a bid to diversify the crude oil resources rather than depending majorly on GCC and Iranian crude oil, India’s state-owned oil refiner IOC inked the $1.5 billion deal buying American crude oil for another year. Under the first ever deal finalised by an Indian PSU oil refiner to import of US origin crude oil grades, IOC will import up to 3 million tonnes of US origin crude oil around the year. Currently, the estimated price is $1.5 billion, but it might vary as per the concurrent crude prices at the time of delivery of cargoes.
Not only will this make India less dependent on gulf crude resources, but it will also boost trade relations between New Delhi and Washington. For the US – being the largest producer of crude oil in the world, signing the first PSU deal in India – which is one of the largest consumers of crude oil – is a double fold win. The deal will eventually help in securing the humongous Indian demand for crude, and it will strategic replacement as a major crude exporter, over the monopoly of Arab nations.
However, since the US still holds the locational disadvantage, and shipping of 60,000 barrels of crude oil each day might cost much more compared to what the Arab nations provide – they are desperately offering a number of beneficial terms and bargains. Also, such deals are usually not publicly announced, but the reasons can be assumed since it was publicised just a day ahead of Saudi Arabia Crown Prince Mohammed bin Salman’s visit to India.