NEW DELHI: India is set to emerge as a key market for American crude exports in coming months, as refineries in that Country are ramping up “test” purchases of U.S. grades to diversify their imports. U.S. exports recently set a weekly record with nearly 2 million barrels of crude a day sent overseas. But shipments to India have been rare, with just a few deliveries since the U.S. lifted its ban on crude exports in late 2015. Indian refineries are starting to increase purchases as the Country seeks to secure more supply from outside the Middle East. Refiners are testing both U.S. sweet and sour crudes in their facilities, a common practice when importing crude from new sources.
“A lot of these (Indian refiners) want to see what it’s like if they run it,” said one Houston-based oil broker.
“They want to get a taste of U.S. crude.” Those refiners are taking advantage of a wide spread between U.S. oil and other global benchmarks, which has created an attractive discount on American crude grades.
Indian refiners Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corporation Limited were given a special permission by the Shipping Ministry to import oil from the United States until March. “They’ve been stepping up to be a sizeable importer; they’re looking to diversify away from the Middle East,” said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.