IOC Skips U.S. Oil, Buys Nigerian and Middle Eastern Crude Instead

Post by : Monika

Photo: Reuters

India is one of the biggest oil importers in the world. Every day, the country needs millions of barrels of oil to run cars, buses, factories, and power plants. Without enough oil, the Indian economy would slow down. Because of this, India pays very close attention to where it buys oil from, how much it costs, and how safely it can arrive.

In September 2025, Indian Oil Corporation (IOC), the country’s largest state-owned refiner, made a big decision. It decided to skip buying oil from the United States in its latest tender. Instead, it bought two million barrels from Nigeria and one million barrels from Abu Dhabi.

This was surprising, because just one week earlier, IOC had bought five million barrels of U.S. West Texas Intermediate (WTI) crude. So why the sudden change? The answer lies in cost, politics, and long-term strategy.

Why Indian Oil Skipped U.S. Oil

There are several reasons behind this decision.

1. High Landing Costs

When companies buy oil, they don’t just look at the price of crude in the global market. They also look at the landing cost—which means the full cost of bringing the oil to Indian ports. This includes shipping, insurance, taxes, and handling.

U.S. oil often looks cheaper when comparing international prices, but once you add transport and delivery, it becomes more expensive than Nigerian or Middle Eastern oil. This time, Nigerian and Abu Dhabi oil turned out to be cheaper for India overall.

2. Trade Tension with the United States

The United States recently doubled tariffs on Indian goods, raising them to 50%. This happened because India continued to buy oil from Russia despite U.S. pressure to reduce such imports. Buying large amounts of U.S. oil while facing trade disputes made little sense for IOC. Instead, it decided to focus on suppliers with fewer political complications.

3. Convenience and Timing

Oil from the Middle East reaches India faster because of geographical closeness. Nigerian oil, though further, has shipping routes that India has used for decades. Compared to U.S. oil, these supplies are easier to arrange and more reliable for timing.

What IOC Bought

Nigeria: IOC purchased two million barrels of oil grades called Agbami and Usan. These were bought on a free-on-board (FOB) basis, which means IOC takes responsibility once the oil is loaded onto ships in Nigeria.

Abu Dhabi: IOC bought one million barrels of Das crude. This was bought on a delivered basis, which means the supplier is responsible for bringing the oil directly to India’s ports. The shipment is expected in late October or early November.

This balance of free-on-board and delivered deals helps IOC manage risk and ensure smooth delivery.

India’s Larger Oil Buying Pattern

India never depends on just one country for oil. Instead, it spreads out purchases across many nations. This reduces risks and gives India more bargaining power.

In August 2025, IOC bought five million barrels of U.S. WTI crude.

Other refiners such as Bharat Petroleum (BPCL) and Reliance Industries also purchased U.S. crude for delivery later in the year.

Indian refiners together bought about 22 million barrels of non-Russian crude from countries like Nigeria, Brazil, Libya, and the Middle East for delivery in September and October.

This shows a clear strategy: India is keeping its options open while balancing between different global suppliers.

Why Diversification is Important

Oil is not just about price. It is about security and stability. If India depends too much on one supplier, any political issue, war, or natural disaster in that country could stop the supply. By buying oil from many countries—Russia, the U.S., Nigeria, Abu Dhabi, Brazil, and Libya—India ensures that it will always have backup options.

This is especially important now because of conflicts in different regions and rising global tensions over energy trade.

The Role of Politics

Politics always plays a role in oil deals.

India and the U.S.: Relations are tense because the U.S. does not want India to buy Russian oil. The tariff hike to 50% on Indian goods shows the strain in trade ties. Buying less U.S. oil is one way India signals that it won’t be pressured.

India and the Middle East: India has long and friendly ties with Middle Eastern suppliers like Abu Dhabi, Saudi Arabia, and Iraq. Oil from this region is closer and easier to transport.

India and Africa: Nigeria is one of the oldest partners for India’s oil imports. India has been buying Nigerian crude for decades, and the relationship remains steady.

By balancing these partnerships, India reduces political risks.

Example for Better Understanding

Imagine you are a shopkeeper who needs to buy rice for your store. One supplier offers rice at a low price, but it comes from very far away and you have to pay extra for delivery. Another supplier offers rice at a slightly higher price but with free delivery. In the end, the second supplier is cheaper and more reliable.

That is exactly what happened with IOC. U.S. oil looked cheap at first, but after adding transport costs, it became expensive. Nigerian and Abu Dhabi oil turned out cheaper and faster to deliver.

Table: Oil Purchases

• Supplier Country    Oil Amount Bought    Delivery Method    Reason for Choice
• United States (earlier deal)    5 million barrels    Shipping to India    Looked cheaper at first but costly overall
• Nigeria    2 million barrels    Free-on-board    Affordable, reliable, long-term partner
• Abu Dhabi    1 million barrels    Delivered    Faster delivery, trusted supplier

Impact on India

Economic Savings
By avoiding high landing costs, India saves money on imports. Oil is one of the largest parts of India’s import bill, so even small savings matter.

Reduced Political Pressure
Skipping U.S. crude for now helps India avoid further tension with Washington over tariffs and Russian oil.

Stronger Energy Security
With supply spread across multiple countries, India is less dependent on any single nation.

Global Oil Market Context

The global oil market is very unstable right now. Conflicts, tariffs, and shifting alliances are changing supply chains. Many countries are competing for cheaper oil, and producers are also trying to protect their profits.

India’s move shows that buyers must be smart. They cannot just look at one country or one deal—they need to think about long-term costs and risks.

In the coming months, India is expected to continue diversifying its oil imports. Russian oil will remain important, but so will supplies from the U.S., Nigeria, the Middle East, and Latin America.

For IOC and other refiners, every tender will involve careful thinking about cost, distance, timing, and politics. The goal is always the same: keep India’s energy secure and affordable.

Indian Oil Corporation (IOC)