India may store some of its crude oil in the United States, the Hindustan Times reports, citing unnamed sources in the know.
“The proposal to store oil in the US is still at an initial stage. It may be discussed at the second ministerial meeting of the India and US Strategic Energy Partnership (SEP) between Indian petroleum minister Dharmendra Pradhan and the US energy secretary Dan Brouillette on Friday,” one of the sources told the news outlet.
India, the world’s third-largest oil consumer, imports more than 80 percent of the crude oil it processes and consumes. Like the rest of the world, the country’s fuel demand was affected adversely by the coronavirus outbreak and analysts have warned it may take longer to recover than could be hoped for.
At the same time, India has limited oil storage capacity and it got filled quickly amid the crisis, with at least three Indian refiners asking for lower deliveries of crude from the Middle East in May as there was nowhere to store it. Total imports in May dropped to the lowest in more than eight years, Reuters reported last month, at 3.18 million bpd.
As a result, some refiners declared force majeure on imports and others sold surplus oil cargos to the Indian government for its strategic petroleum reserve.
Sufficient oil reserves in storage are crucial for the country’s energy security, and the quickest way to amass it is to use a partner’s storage facilities. The United States has emerged as an important partner in energy, especially after the sanctions that Washington imposed on Iran, forcing India—one of Iran’s largest clients—to seek oil elsewhere and find it in the U.S.
Although India still imports most of its oil from Middle Eastern producers including Saudi Arabia, Iraq, and Nigeria, in just two years the U.S. has become one of the top ten oil suppliers of the Asian economy.