Price, Not Politics, Is Driving Most of India’s Oil Buying

India's imports of spot crude cargoes from producers like the United States and Venezuela are primarily determined by prevailing cargo and oil prices, according to Arun Kumar Singh, the chairman and CEO of India's state-owned Oil and Natural Gas Corporation (ONGC). During a recent annual general meeting, Singh told Indian media that spot crudes are mainly decided based on price, except for term crudes which are gradually decreasing.

He added that it is difficult to know how much will be imported, but at least 60 percent of India's oil imports are influenced by price in each month or M2. Singh also stated that geopolitical issues causing trouble do not affect India's ability to import crude, as there will always be alternatives available. Although India's dependence on primary energy imports has declined, it still imports crude oil at a massive 90 percent for its consumption.

The country, being the world's third-largest crude oil importer, has witnessed a steady increase in dependence on crude oil imports due to rising demand and declining domestic production. The Middle East crisis prompted Indian refiners to seek alternatives, and the government is expanding strategic storage sites to prepare for future supply shocks.

In response to the Iran war and disrupted crude flows at the Strait of Hormuz, India has turned to record crude oil imports from Russia, West Africa, Venezuela, Brazil, and the U.S. to compensate for lost Middle Eastern supply.