Price Trumps Politics in Indian Oil Buying
India's oil buying is driven by prevailing cargo and oil prices, according to Arun Kumar Singh, chairman and CEO of Oil and Natural Gas Corporation (ONGC). In a recent statement, Singh said that imports are decided by price, except for term crudes. The spot crude market is mostly cargo-to-cargo based on price.
Singh stated that at least 60% plus of India's oil imports is a function of the price in that particular month or M+2. This means that even with geopolitical issues affecting supply, economics ultimately prevail. Singh emphasized that despite dependence on primary energy imports, India remains highly dependent on crude oil imports for consumption.
The Middle East crisis has forced Indian refiners to seek alternatives, and the government is expanding strategic storage sites to hold more reserves. Record crude oil imports from Russia have helped cushion the blow, but India also turned to West Africa, Venezuela, Brazil, and the US for spot supply to offset lost Middle Eastern supply.