India, Nigeria’s biggest oil destination, has started buying crude from the United States as it looks to diversify its sources of the commodity, Independent reports.
Refiners such as Bharat Petroleum Corporation Limited and Indian Oil Corporation from India, the world’s third biggest oil consumer, are diversifying crude imports as cheaper alternatives have emerged due to a supply glut in the global markets.
India is the latest Asian country to buy US crude as the cuts by OPEC drove up prices of Middle East heavy-sour crude, or grades with a high sulphur content. An overhaul at Indian refineries has made heavier crude blends a new favourite since they are cheaper than lighter ones.
The US removed the 40-year-old restrictions on its crude exports in December 2015 following the rapid growth of its oil production. Last week, Indian oil minister, Dharmendra Pradhan, said the current state of the global oil market, characterised by low oil prices, was helping India diversify its oil supply sources, as evidenced by its recent purchase of US sour crude.
The Vice-President/Head of Energy Research, Ecobank, Mr. Dolapo Oni however noted that while India is in a bit of a buyers market now and could get discounts from countries like Nigeria as a result, he did not think the US would replace Nigeria anytime soon due to high freight costs and the like.