WCS can help diversify India's crude oil imports

At a time when U.S. President Donald Trump is talking in terms of a legislation—the Sanctioning Russia Act of 2025—aimed at putting pressure on Russian President Vladimir Putin to end the ongoing war in Ukraine, India needs to seriously look at diversifying its crude oil sourcing. The bill proposes steep American tariffs on goods and services exports from countries that purchase Russian-origin crude oil, natural gas, and petroleum products. It includes a controversial provision to impose a 500% tariff on countries importing Russian energy products.

In FY25, Russia accounted for 38% of the crude oil that India imported. While that’s unlikely to change sharply, India needs to be prepared, since it imports more than 85% of the country's crude oil needs. That’s where Western Canadian Select (WCS) crude comes in. It is critical for India's energy security due to its potential to diversify India's heavy crude oil imports and reduce dependence on traditional suppliers in the Middle East. WCS offers an opportunity for India to secure a stable and discounted supply of crude oil, which can be refined at Indian refineries.

“India has about 5–6 million barrels per day of complex refining capacity. Reliance’s Jamnagar, IndianOil's Paradip, and Bharat Petroleum’s Bina refineries are engineered to process ultra-heavy crudes like Venezuela's Merey and WCS,” says Atanu Mukherjee, Chief Executive Officer, Dastur Energy. These refineries can convert the "bottoms" of heavy crude into valuable products like petrochemicals, LPG, and syngas, enhancing gross refining margins by 30–50% depending on refinery configuration. Apart from India, only the U.S. and China have such complex refineries.

WCS is among the most discounted globally due to its heavy nature and being sourced from landlocked Alberta. Mukherjee adds: “Long-term contracts for WCS could save India $1.5–3.6 billion annually due to favourable pricing and discounts compared to other heavy crude sources.” Securing WCS supplies aligns with India's strategy to build a 15-day strategic crude reserve, helping buffer against global price shocks and supply uncertainties.

The other factor that facilitates sourcing WCS is the recent expansion of the Trans Mountain Pipeline, which can now export up to 1 million barrels per day via its Pacific coast. This creates a structural opportunity for India to tap into long-term, stable, and cheaper heavy crude. The Trans Mountain Pipeline now runs from Edmonton, Alberta, to Westridge Marine Terminal in Burnaby, British Columbia, on the Pacific coast.

More importantly, WCS trades at a $10–15 discount to Brent, and often more than the Russian Urals. Even after accounting for longer shipping times—30 days from Vancouver to India as opposed to seven days from Basra (Iraq)—the economics are compelling. Shipping costs are $1.50 per barrel from Canada vs. $0.50 from the Middle East—but the discount of $10+ more than offsets this. Mukherjee points out that the value extracted from heavy crudes in complex refineries is much higher.

But will this create a problem since we also import light crude from the U.S.? American exports to India are mostly light, shale-derived crudes, while Canada offers ultra-heavy grades. These are not substitutes—they serve different processing purposes. Canadian heavy crude complements U.S. light shale crude imports, as they serve different refinery processing needs, thus enhancing supply resilience and flexibility. India can and should optimise its crude basket, diversifying from a 40%+ dependency on Middle Eastern sources, while reducing vulnerability to global price shocks or sanctions.

From a policy standpoint, it's about resilience. With Russian crude, India turned into a refiner for global markets by refining discounted Urals and exporting fuels. The same arbitrage opportunity exists with Canadian crude. Because of the complexity of Indian refineries, they can export an entirely different set of petroleum products after refining Canadian heavy crude.

China has already scaled imports from Canada to over 300,000 barrels per day, with the expansion of the Trans Mountain Pipeline. It’s time for India to seize the opportunity and diversify its crude sourcing further. More importantly, this route is unlikely to face any geopolitical issues in the future in transporting the oil. That could well be the decider.