US Secretary of State Marco Rubio has asked India to buy more US and Venezuelan oil during his visit to India. Senior refining officials, government data and shipping data offer a glimpse into the viability of US oil and gas supplies for Indian refiners.
Currently, US crude is unaffordable for Indian refiners, while Venezuelan oil offers value, but mainly for private sector Reliance Industries and provided Washington allocates supplies, according to Indian government data and industry sources.
US crude was the most expensive for Indian refiners in August, the latest Indian customs data providing country-wise details showed. September and October data indicate similar trends.
Senior refining officials told Business Standard that they had substantially slowed purchases of US crude in the past few months because of record freight rates.
“The volumes (US) are much smaller than we saw earlier in the year and the economics are punishing,” said Aaron Kudlow, crude commodity owner at UK-based Sparta Commodities. “The arb for US barrels into the Far East remains closed for January delivery.”
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Indian refiners paid the highest premium of $21 per barrel to the Indian Crude Basket (ICB), calculated on a delivered basis, for US crude in August. Premiums were at similar levels in July, explaining why Indian imports of US grades have slowed in recent months despite Washington’s push for higher purchases and the crisis in West Asia.
“US crude does have a place in India's import basket, but the volumes will largely depend on pricing, freight economics and refinery-specific requirements,” said Sumit Ritolia, lead analyst, India, Kpler. “Unless US barrels are competitively priced against alternative light grades from other regions, there is limited incentive for sustained large-scale imports.”
US crude oil, predominantly comprising low-sulphur grades, was the most expensive at $111 per barrel on a landed basis in August, weighed down by high transport and insurance costs, Indian refiners said and customs data showed.
Arab Light crude from Saudi Arabia averaged $93 per barrel during the period.
Freight rates are at stratospheric levels after some of the largest Very Large Crude Carriers (VLCCs) were tied up for months transporting crude from the West Asian war zone around the Strait of Hormuz, a senior trader at a state-run refiner said.
He said freight now comprises around 30 per cent of the cost of a cargo compared with less than 5 per cent in pre-war February.
Such high freight costs have eroded the value of US oil for Indian refiners, he said.
Indian refiners are ready to charter VLCCs at more than $1 million per day compared with $50,000-$100,000 in February, according to a senior trader in Singapore. However, ships remain difficult to secure.
Ritolia said there were two major constraints for US crude exports to India.
The first is the significantly higher freight cost associated with moving crude from the US Gulf Coast to India.
The second is that much of the US crude available for export is relatively light and sweet, while several Indian refineries are configured to process medium and heavier grades.
Higher light-distillate yields also do not necessarily provide the best economics, particularly when refiners are looking to maximise middle-distillate production.
Venezuela oil
Venezuelan oil, on the other hand, is priced competitively, but volumes are limited as most crude is allocated to US refiners and Reliance Industries, two state refining officials said.
Discounts on Venezuelan grades in August widened the most since India resumed imports of the oil in January 2024, expanding nearly five-fold from July, according to Indian government data and industry sources.
Venezuelan crude oil, predominantly comprising heavy Merey grades, landed in India at an average discount of $24 per barrel to the ICB in August on a delivered basis, compared with a discount of $5 per barrel in July, according to customs data.
These discounts continued in September and October, though at lower levels, a senior refining official said.
Reliance is the only Indian refiner to consistently process Venezuelan oil, apart from refiners on the US Gulf Coast, said R Ramachandran, an industry consultant and former refining chief at Bharat Petroleum.
He said Reliance had the blending infrastructure and refining capability to process Merey, a widely used Venezuelan grade.
Venezuelan crude is typically among the heaviest, cheapest and most difficult grades to process because of its high sulphur content and acidity.
The landed cost of Venezuelan oil, mainly imported by Reliance Industries, stood at $66 per barrel in August, $11 lower than $77 per barrel in July. There were no deliveries in August 2025.
Wider discounts and lower prices accelerated Indian imports of Venezuelan oil in August.
Kpler data showed 350,000 barrels per day (bpd) of Venezuelan crude landed in India in August, compared with 218,000 bpd in July.
Reliance Industries was the only buyer in July and September and the largest buyer in August.
Omani and Brazilian grades offered the next-biggest discounts to the ICB in August, at $10-$11 per barrel on a delivered basis.
Typically, Iraqi and Russian grades, which together account for more than half of India’s crude oil imports, are among the cheapest.
They averaged $62 per barrel in February but rose to $93 per barrel and $88 per barrel, respectively, in August.
The Indian crude oil basket formula for August was calculated using a 75 per cent weightage for international benchmark Brent-linked crudes imported into India and 25 per cent for the Dubai/Oman benchmark, according to Indian oil ministry data.
Traditionally, the ICB was predominantly driven by Dubai/Oman-linked grades. However, higher Russian crude imports after the Ukraine conflict began in 2022 and disruptions to medium sour crude supplies following the outbreak of hostilities in West Asia in March have tilted the basket towards Brent-linked oil.