Business, Economy & Banking Current Affairs

India to import crude oil from US for first time

India, the world’s third-largest oil importer, for the first time will import crude oil from the United States. The purchase comes after Prime Minister Narendra Modi’s visit to the US in June 2017 when President Donald Trump had assured that US looks forward to export more energy products to India.

Key Facts

Indian Oil Corp (IOC) has bought 1.6 million barrels of US Mars crude (a heavy, high-sulphur grade) and 400,000 barrels of Western Canadian Select that will be delivered onboard a Very Large Crude Carrier. The import will take place after IOC gets the carrier in October 2017 from PetroChina. The oil will be loaded off the US Gulf Coast,

The import of crude from US could become an alternative source for the Indian companies for the supply of heavy, high-sulphur grades as feedstocks, which typically sell at a lower cost relative to other oil types. Besides IOC, Bharat Petroleum Corp Ltd (BPCL) is second Indian refiner which also has planned to buy its first ever US crude oil cargo and has issued a purchase tender.

India will be the latest Asian country to buy US crude after Japan, South Korea, Thailand, Australia, China and Taiwan as they seek to diversify oil imports from other regions after the OPEC production cuts raised prices of Middle East heavy-sour crude ( grades with a high sulphur content).

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India’s forex reserves at record-high of $386.53 billion

According to RBI, India’s foreign exchange (Forex) reserves have increased by $4.007 billion to touch a record high of $386.539 billion in the week that ended 30th June 2017.

The components of India’s Foreign Exchange Reserves include Foreign currency assets (FCAs), Special Drawing Rights (SDRs), Gold and RBI’s Reserve position with International Monetary Fund (IMF). 

Key Facts

The increase forex in the reporting week was due to increase FCAs. It rose by $3.724 billion to $362.388 billion. Gold reserves also increased by $252.8 million to $20.348 billion. India’s special drawing rights (SDRs) with the International Monetary Fund (IMF) also rose by $11.8 million to $1.479 billion. The RBI’s reserve position with IMF also increased by $18.9 million to $2.322 billion.

FCAs forms major part of the overall reserves. It consists of US dollar and other major non-US global currencies. It also comprises of investments in US Treasury bonds, bonds of other selected governments, deposits with foreign central and commercial banks. FCAs also include with them the effects of appreciation or depreciation of non-US currencies like the euro, pound, and yen and is expressed in terms of dollars.

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