No deal on US oil, price will decide

While the two countries have decided to scale up crude imports from the US after the 2+2 meet, it is conditional on the price and cost of transport, the official said.

Any import of crude oil from the US should not be seen as replacing Iranian petroleum, he said.

“Yes, scaling up oil imports from the US was discussed at the 2+2 dialogue between the two countries as part of measures to correct the trade deficit. But we are clear that these are commercial decisions — dependent on how competitively oil is priced and on the requirements of our refineries,” a BusinessLine report quoted a senior government official as saying.

However, the report said the US is working on improving the infrastructure for exporting oil and gas and “once done the scope of scaling up imports will be higher”.

While this may reduce the cost of US crude, allowing a scaling up crude imports from that country, it does not mean replacing Iranian oil, the official is reported to have said.

Indian refiners such as Indian Oil Corporation are already buying US oil. From April 2017 to February 2018, 2.1 million tonnes were bought, and more is on the way.

The problem with US crude is the long haul as it has to compete with West African, North Sea and Asian crude, all of which have a shorter haul to India. 

Analysts say crude imports from US cannot be the main source for India, although it may serve as stop-gap when the arbitrage works.

Meanwhile, the trump regime has identified India amongst 16 countries with which the US runs a trade deficit and is looking for ways to bridge that deficit. Buying more crude oil from the US is one way to bridge the deficit.

Along with this US exports of high-tech, expensive defence equipment to India will help the United States reduce its bulging trade deficit.