What is the Americas-India Oil Axis?

The Americas-India Oil Axis refers to the growing energy trade corridor between oil producers in the United States and Brazil and India as a major consumer. This shift is happening as India strategically diversifies its oil supply away from traditional sources in the Middle East and Russia to enhance its energy security. This creates new long-distance trade routes across oceans and benefits both the producers who gain new markets and the tanker companies that transport the oil.

Why is India importing more oil from the Americas?

India is importing more oil from the U.S. and Brazil as part of a strategic effort to diversify its energy sources and reduce dependence on traditional suppliers. This helps India enhance its energy security by not being overly reliant on any single region. Additionally, the quality of crude oil from these regions often matches well with Indian refineries, and establishing multiple supply relationships gives India more bargaining power in global energy markets.

What are VLCCs and Suezmax tankers?

These are different sizes of oil tanker ships. Very Large Crude Carriers (VLCCs) are massive ships that can transport around 2 million barrels of oil and are ideal for long-distance routes like those from the Americas to India. Suezmax tankers are named because they're the largest ships that can navigate through the Suez Canal when fully loaded, typically carrying about 1 million barrels. These different vessel types serve specific trade routes and port requirements in the global oil transportation network.

How do dividend yields work for oil and shipping stocks?

Dividend yields represent the annual dividend payment as a percentage of the current stock price. For oil producers, dividends often reflect the company's profitability and cash flow from oil sales. Shipping companies like tanker operators tend to have more variable dividends that might change based on shipping rates and market conditions. When oil trade routes become longer (like from the Americas to India instead of the Middle East to India), tanker companies can earn more, potentially leading to higher dividend payments to shareholders.

What's the difference between oil producers and oil tankers in this theme?

This theme includes two types of companies with different roles in the energy supply chain. Oil producers (like Petrobras, Exxon Mobil, and EOG Resources) extract crude oil from the ground in the U.S. and Brazil. They benefit from increased demand and export volumes to India. Oil tanker companies (like Frontline, International Seaways, and Teekay Tankers) own and operate the ships that transport the oil across oceans. They benefit from longer voyage distances and increased shipping activity. Including both types provides exposure to different aspects of this growing trade relationship.

15 handpicked stocks

Americas-India Oil Axis

A carefully selected group of stocks capturing the growing energy corridor between the Americas and India. These companies, handpicked by our expert analysts, represent both oil producers in the U.S. and Brazil and the tanker companies transporting crude across these new, long-haul routes.

Han Tan | Market Analyst

Updated 2 days ago | Published at जुलाई 14