US crude exports to India hit record highs in June and are set to almost double last year’s total as the Asian country scrambles to replace oil supplies as Venezuela’s output continues to fall and Iran faces sanctions from the United States.

US crude exports to India will amount to over 15 million barrels this year, compared to 8 million in 2017

In the wake of the Trump administration’s decision to slap sanctions on Iranian crude exports, India has opted to replace some of its oil supply from Iran with US crude exports.  India is also making the shift in an effort to compensate for falling Venezuelan oil exports.

US crude exports will nearly double in 2018 to 15 million barrels from 8 million barrels in 2017 and, last month, US oil exports to India hit a record high.

President Donald Trump’s government is pressuring its allies to cut imports of Iranian crude to zero by November.  India’s move to buy US crude is seen as a win for Trump’s efforts to use energy to move ahead its political goals.

According to Reuters, US crude exports to India could rise even further should China impose tariffs on US oil imports in the ongoing trade war between the two economic superpowers.  Such a move by China could result in lower US crude prices.

A.K. Sharma, the head of finance at Indian Oil Corp., said US crude is more attractive to his company due to the lower cost.  He adds Indian Oil Corp. could buy more US crude should China cut off imports of US oil.

“If China levies a tariff on US oil then US imports to India will probably rise,” he told Reuters. “We are looking for a mini-term deal to buy three to four cargoes of U.S. oil over a period of three to six months instead of buying single cargoes.”

Venezuelan crude exports to India have fallen by 21 per cent in the first half of 2018 due to US sanctions and an economic breakdown in the South American country that has severely hobbled the oil industry.

The Trump administration is increasing sanctions on a number of Venezuelan nationals and companies as part of a campaign to pressure the country’s leader Nicholas Maduro to make political and market reforms.

Iran and Venezuela have traditionally been two of India’s top five suppliers of crude.

In June, India reduced its imports of Iranian crude by 16 per cent compared to May.  During the first half of the year, prior to the sanctions announcement, India had sharply increased its buys of Iranian oil.

Reid l’Anson, an analyst at cargo tracking firm Kpler told Reuters that India’s decision to cut back on Iranian crude imports is “an an opportunity for US producers to sell into the Indian market. Indian demand is quite robust”.

Next month, the FPMC C Melody, a very large crude carrier (VLCC) is scheduled to arrive at the northwestern Indian port city Sikka.  The vessel is carrying 1.93 million barrels of US crude, according to Reuters tracking data.

Another VLCC, the Maharah, is at sea after leaving Galveston last week and is steaming towards Sikka carrying 1.98 million barrels of oil.

Two more tankers are leaving Texas this month for undisclosed Indian ports, bringing the total US crude exports to India to at least 191,000 b/d this month.

Reuters reports that some Indian refiners are completing test runs of US crude this year.  They are often mixing it with heavier grades that the facilities normally process, according to analysts and traders.

“They really have started to make the shift,” Olivier Jakob, managing director of energy consultancy PetroMatrix told Reuters. “India is comfortable with a regular flow from the US now.”