India may increase fixed-term contracts for oil supplies from the United States under the rule of the new US President Donald Trump, but it is unlikely to reduce oil purchases from Russia, S&P Global Commodity Insights reports, citing the opinions of analysts and oil market players.
⠀
Trump, who had already served as US President since the 2016 elections, won the presidential election on November 5. He became the first US politician since the 19th century to return to the White House after a four-year break. The Electoral College from the states must vote on candidates in accordance with the will of the voters on December 17, and on January 6 the new Congress will approve the results of the vote. The inauguration will take place on January 20.
⠀
“India is unlikely to reduce its purchases of Russian oil under the new rule of Donald Trump, but may consider entering into more emergency import contracts and storage cooperation with the United States,” analysts and trade sources said.
⠀
India mostly buys U.S. oil on a spot basis, but as U.S. production increases, both sides could increasingly explore the possibility of entering into forward contracts, several oil industry sources said.
⠀
India has pledged to continue to buy oil from the cheapest sources available to meet rising demand, and Russian oil falls into this category due to discounts, it also said.
⠀
“I don’t think the US will offer its … oil at a price lower than Russia’s. So a sharp shift is less likely,” Abhishek Ranjan, head of oil research for South Asia at S&P Global Commodity Insights said.
⠀
And as Priyanka Kishore, director and chief economist at Singapore-based research consultancy Asia Decoded, said, one of the Indian government’s top priorities is to keep oil import costs low, and India is unlikely to change this position unless the market scenario changes.
