Indian Oil Corporation (IOC) has signed a deal to buy 3 million tonnes of crude worth $1.5 billion from the United States during the next fiscal.
The deal, which is the first ever by an Indian firm, is seen as an attempt to strengthen strategic energy cooperation between the two nations and reduce the trade deficit.
While the oil deal will help the state-owned refiner to diversify its crude sources, analysts see this as a prelude to cut the quantum of oil import from Iran when the Trump administration takes up the Iran sanction waiver for review.
“IOC has finalised a term contract to import up to 3 million tonnes (mt) of crude oil of US origin as part of its strategy to diversify term crude sources,” the IOC said.
This is the first time any Indian refiner has signed an annual contract since the country in 2017 began importing crude oil from the US. The state-owned firm buys about 75 per cent of its oil needs through long-term deals, mostly with national oil companies of West Asian countries.
Oil imports from the US during the April-December period of 2018 increased 294 per cent to 4.58mt compared with 1.16mt imported in the same period in 2017, according to the government's trade data.