Price-conscious Indian buyers, hit by OPEC supply cuts and higher prices, have started to look for alternatives to Gulf oil imports this year. Indian buyers of crude oil have turned to Russia and Venezuela, and most recently, the United States to meet its oil requirements.
For India, this is a welcome diversification, with the potential to reduce uncertainty in oil pricing and supplies. The ‘Fragile Five’ petrostates – Iran, Iraq, Libya, Nigeria and Venezuela – remain politically unstable, with Iraq dealing with a Kurdish uprising, Iran under threat of new sanctions, and Venezuela struggling with internal discontent as its local infrastructure remain in a state of collapse. OPEC cuts have limited India's ability to consistently procure crude supply from the Middle East, and the body is set to expand its cuts for another nine months, well into 2018.
Enter the United States. Earlier this month, India received its first ever shipment of US crude, with a massive crude carrier docking at a port in Odisha. This is a remarkable renewal of ties since India stopped importing oil from the United States in 1975.
India and the US have pledged towards stronger ties economically and politically, with US Secretary of State Rex Tillerson saying that India would be a key ally for the country's administration. Both Indian Oil Corporation and Bharat Petroleum have placed orders for over 2 million barrels from the United States.
