New Delhi: A type of US crude pumped in the Gulf of Mexico is proving to be more attractive in the fastest-growing oil market compared with Middle East staples that are on offer.

Indian Oil Corp., the nation’s largest refiner, has bought Mars Blend crude for arrival in October to the South Asian nation, according to Arun Kumar Sharma, the company’s finance director. That’s the processor’s first purchase of American supply. About 1.6 million barrels of the grade will be loaded with 400,000 barrels of West Canadian Select on a very large crude carrier, he said.

The shipment is set for Asia as arbitrage flows of Mars crude to the world’s biggest oil market become viable versus Middle East oil, supplies of which have been reduced by OPEC’s output curbs aimed at easing a glut. The cuts have turned regional benchmark Dubai crude costlier relative to other markers such as Brent and US. West Texas Intermediate, luring rival supplies to India as well as other big consumer nations.

“Middle Eastern suppliers are waking up to the growing dominance of US crude in the Asian market,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. “Heavy grades of US crude have become more price competitive compared with those from the Middle East, thanks to OPEC’s oil-output cut, which provided the US an opportunity to boost its own oil production.”

Mars crude traded at about 70-90 cents a barrel below WTI on a free-on-board (FOB) shipping basis late last week, according to a Bloomberg survey of four traders. That’s equivalent to a 10 cent discount to 10 cent premium over Dubai crude on a cost and freight (CFR) basis to Japan on a VLCC, according to Bloomberg calculations.

The discount of Dubai crude to Brent, the benchmark for more than half the world’s oil, has slumped to about 80 cents (Dh2.94) a barrel, compared with more than $3.50 a barrel in early July last year, according to data compiled from PVM Oil Associates.

“North American crude has become very competitive to Middle East crude because of narrowing Brent-Dubai differentials and low freight charges,” Indian Oil’s Sharma said. The company, which bought the crude via a tender, purchased the US oil at a price “very close to Basrah Light,” he said, referring to Iraq’s flagship grade.

Another state-run Indian refiner, Bharat Petroleum Corp., is also seeking 1 million barrels of US crude for delivery in September-October to Kochi on the nation’s west coast, according to a tender document obtained by Bloomberg. Grades including Thunder Horse, Southern Green Canyon, Mars Blend, West Texas Sour and Alaskan North Slope are being sought by the processor.

India has been considering buying American oil ever since the US reversed a decades-old law that restricted exports of unrefined crude, as the South Asian nation attempts to diversify its supply sources. The country, which imports more than 80 per cent of its crude requirements, purchases oil from three primary areas: the Middle East, Latin America and Africa.

India’s Oil Minister Dharmendra Pradhan has been haggling with Opec, which meets about 86 per cent of the nation’s oil needs, for a discount by virtue of being a large and loyal customer.

President Donald Trump last month said during a visit by Indian Prime Minister Narendra Modi that the US expects to export more American energy to India, a $2 trillion economy that the International Energy Agency expects will be the fastest-growing oil consumer through 2040.

“We will look at sourcing more volumes of US crude going ahead,” Sharma said.