India asks refiners to consider buying more US, Venezuelan oil amid trade deal shifts

India asked state-owned refiners to consider buying more US and Venezuelan crude after a trade deal the Trump administration said included a pledge to stop importing Russian barrels.

Refiners have been urged to prioritise US grades when they seek oil from the spot market via tenders, said refinery executives familiar with the matter. The government made a similar request regarding Venezuelan crude, they added, though those cargoes will be sourced through private talks with traders.

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India’s oil-buying is under scrutiny after President Donald Trump said the nation agreed to stop taking Russian crude as part of the trade deal, a claim New Delhi hasn’t directly addressed publicly. India’s response has been that it’s seeking to diversify its sources and energy security remained top priority.

Still, there are limits to how much US and Venezuelan crude that Indian refiners can take. American grades are light and sweet, meaning a lower sulfur content, which isn’t optimal for Indian refining units built to process medium crudes. Cost is also likely to play a big part in the decision making.

There’s doubt over the economic viability of importing larger volumes from the US, especially in the near term, due to higher freight rates limiting the cost-effectiveness of long voyages. Indian refiners also have cheaper alternatives from West Africa and Kazakhstan that are a closer shipping distance.

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Indian processors could potentially take around 20 million tons a year of US oil, or about 400,000 barrels a day, the refinery executives said, asking to not be identified due to the sensitivity of the matter. That would still be higher than last year, with Kpler estimating daily imports of 225,000 barrels.

The Trump administration has tapped trading giants Vitol Group and Trafigura Group to market Venezuelan crude after the US seized President Nicolás Maduro earlier this year and asserted control over the nation’s energy industry, with Indian buyers snapping up some initial cargoes recently.

Refiners including Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. recently purchased about 4 million barrels of Venezuelan oil. Refinery executives said that’s the upper limit of heavy, sour crude from the Latin American nation that state refiners can process each month.

IOC, BPCL, HPCL and a spokesperson for India’s oil ministry didn’t respond to requests for comment.