• What were the imports of petroleum products from India as a % of U.S. total imports in 2014, 2018, 2021-24? Inspite of being self-sufficient in crude oil, why does the U.S. import products from India? U.S. Refinery capacity is more to process Hard Crude but not Light crude that it largely produces now, hence imports.

For the past few weeks there is a lot of talk of export of Russian Oil by India to the U.S. Peter Navarro, White House Trade Advisor, made numerous allegations against India the latest being against Brahmins.

Wish Peter ji reads this article in American Fuel Oil and Manufacturers Association “In 2021, the U.S. imported an average of 199,000 barrels per day (bpd) of crude oil and 473,000 bpd of other petroleum products from Russia. Although Russian crude accounts for only 3% of U.S. crude oil imports and about 1%t of total crude oil processed by U.S. refineries—Russian crude oil imports are important to refineries on the West Coast and Gulf Coast.” Did U.S. contribute to Russia’s war kitty? 

In response to accusations on buying Russian oil note. India’s External Affairs Minister Dr S Jaishankar aptly said, “India forced none to buy. If you do not like it, do not buy.” 

Importantly, this article shares insights on why the U.S. is buying processed oils from India whilst highlighting some complexities of the oil business.

Since am not a domain expert reached out to friends who asked me to visit https://www.eia.gov/ i.e. the U.S. Energy Administration Information site. It was followed by an online search and chat with learned friends. Read on.

According to this EIA link, U.S. Crude Oil and Product Imports were-

Table1Imports from India Trend - Per Thousand Barrels

Sourcing from India as a % of total U.S. imports is miniscule. Even before the Ukraine war started, imports were 1.18% in 2021. Indeed, they peaked at 1.27% in 2023 only to fall substantially to .86% in 2024.

Next Company Level Imports on this EIA link  gives month wise imports (probably each transaction).

I reviewed data for three months of 2024 and found these products imported from India-Unfinished Oils, Heavy Gas Oils, All Other Motor Gas Blending Components, All Other Motor Gas Blending Components, MGBC, Gasoline Treated as Blendstock (GTAB), Unfinished Oils, Heavy Gas Oils, Jet Fuel, Kerosene-Type. If U.S. companies/traders had stock why would they import?

The name of importers is given and known to the U.S. government. If such was the concern, the same products could be sourced from other countries.

Which are the largest producers and consumers of Crude Oil?

According to 2023 figures, the largest producers are USA, Russia, Saudi Arabia, Canada and Iraq. Reasons for increase in production vary. U.S.’s was due to the shale oil revolution and new oil capacities, Russia’s due to the Russia-Ukraine War, Canada due to increasing processing of oil sands and Iraq’s production has grown by app 4mbpd as the situation somewhat stabilised after the war. 

According to 2023 figures, largest consumers are USA, China, India, Saudi Arabia, Russia, Japan the first three consume 18%, 17%, 6% of global consumption.

Source for both paras information is BP Statistical Review of World Energy 2024.

Aside, which are the largest exporters of Crude Oil to the U.S.?

A search revealed the countries are Canada followed by Mexico. Other significant suppliers are Saudi Arabia, Iraq, and Colombia, though the exact order and percentages may vary from year to year.

But, is not the U.S. said to be self-sufficient in crude oil!

It is amongst the world’s top producers of crude oil. According to this EIA link, the top 5 producing states of crude oil in 2022 were Texas (annexed in 1845), New Mexico, North Dakota, Colarado, Alaska (purchased from Russia in 1867).

Why does U.S. import and export crude and petroleum products?

We must know that not all crude oil is the same. According to a search, “Different types have varying chemical compositions and densities. A country's refineries may be specifically designed to process certain grades of oil, such as heavy, high-sulphur crude.” Further, crude could be sour or sweet. 

Historically U.S. refineries were made to process heavy crude supplied by Canada and Mexico. But, today the U.S. is producing more of Light crude. U.S. refinery capacity to process light oils is limited hence they export. Further, given that U.S. is a huge country sometimes it makes economic sense for states on the West or East Coast to import petroleum products rather than source locally.

According to this article in Nasdaq.com, “The U.S. does produce enough oil to meet its own needs, but it is the wrong type of oil. Crude is graded according to two main metrics, weight and sweetness. The weight of oil defines how easy it is to refine, or break down into its usable component parts, such as gasoline, jet fuel and diesel. Light crude is the easiest to handle, heavy is the most difficult, with intermediate obviously somewhere in between. The sweetness refers to the sulphur content of unrefined oil. The sweeter it is, the less sulphur it contains.”

Note that if refineries that were made to process heavy crude process light crude it adversely affects input-output ratio and profitability. Typically, refineries that process heavy crude are high on capital expenditure but have lower operating cost while those that process light crude are high on operating cost but low on capex.

This Washington Post article reiterates the above and says, “There’s a mismatch between the new production we’re developing as an industry and our country’s existing refining capacity,” said Ryan Lance, ConocoPhillips Chairman and CEO. “To process this new, lighter oil, refineries would have to operate inefficiently or at a reduced rate. They need to buy oil at a discount in order to make it economic to refine it, which hurts domestic producers and ultimately, consumers.””

Explained on EIA link-U.S. Oil and Petroleum products imports and exports

Key Takeaways

1. The percentage of U.S. imports of petroleum products from India is miniscule.

2. The U.S. is forced to import such products from countries like India because of a mismatch between the oil grade it produces and its refinery capacity.

3. The U.S. needs to increase refining capacity to process light crude that it currently produces.

4. Study of U.S. Refinery Capacity of Heavy and Light Crude, highlighting gaps would need a separate article.

Utmost care taken in culling out data. Errors if any are unintentional and without malafide intent. I admire the U.S. for its innovation. The EIA is an informative site     Some may try to provoke India. Stay calm, let facts and actions speak.

Read, reflect and decide. Feedback welcome.

I am grateful to friends for guiding me. eSamskriti is grateful to SMART for co-supporting the esamskriti knowledge sharing effort.

This article should not be republished without written permission of www.esamskriti.com 

Also read

1. India Russia Trump Oil – The Facts   

2. India is a Union of States not a Federation like USA

This is the eight in a series of articles post Trump Tariffs. One, explained what is trade deficit? Two, looked at both the trade and geo political issues. What does U.S.A. want? What is President’s Trump’s approach and Implications? 15 IDEAS how India can respond. Three, Look at Trade Deficit Numbers after removing APPLE Iphone exports Four, US Needs Indian Pharma products and India needs US market . Five, Cooperate, Compete, Aatmanirbharta should be India’s MANTRAS in this UNCERTAIN world . Six, What India Inc MUST DO to Reduce Imports from China . Seven, 15 Ways India can respond to U.S. Sanctions