With a $2.6 billion trade surplus in its favor, Sri Lanka is now exploring U.S. oil imports to balance the scales and negotiate a crucial tariff cut before August 1. But can a nation with no state-run fuel sellers strike a deal with private U.S. giants without breaking its own rules?
Sri Lanka is considering importing oil from the United States as part of efforts to reduce its trade surplus and potentially qualify for a reduction in the 30% tariff imposed by the U.S. on Sri Lankan goods, a key government minister has confirmed.
Minister of Labour and Deputy Minister of Economic Development, Dr. Anil Jayantha Fernando, told the Daily Mirror that Sri Lanka’s monthly oil import bill currently ranges between $300 million to $400 million. He said U.S. oil imports would be considered if pricing is competitive and would help reduce the trade gap.
“We can discuss the possibility of importing oil. We do not currently import oil from the United States,” Dr. Fernando said. “This doesn’t mean we ignore other competitive tenders. But if the U.S. offers oil at a similar cost, we are ready to move forward.”
One major obstacle, however, is the absence of a U.S. state entity in oil trading. Sri Lanka’s Ceylon Petroleum Corporation (CPC), which usually handles state-level fuel purchases, requires a government-to-government (G2G) framework for such deals. But in the U.S., oil trading is managed exclusively by private corporations, posing a legal and procedural challenge for G2G procurement.
“While Sri Lanka has CPC to handle such G2G deals, the U.S. does not operate state-owned oil companies,” Dr. Fernando explained. “If U.S. private firms want to participate through competitive tenders, we are open to that.”
Last year, Sri Lanka’s total fuel import expenditure hit $4.3 billion. Meanwhile, exports to the U.S. totaled $3 billion in 2024, compared to $368.2 million in imports resulting in a $2.6 billion trade surplus in favor of Sri Lanka.
The U.S. remains Sri Lanka’s largest export destination, accounting for nearly 27% of total exports. The country’s primary export to the U.S. is garments, but the heavy imbalance in trade has triggered a reciprocal 30% tariff on Sri Lankan imports to the U.S.
However, negotiations are ongoing, and the U.S. has given Sri Lanka a deadline until August 1 to reduce the trade gap and potentially ease the tariff rate.
The Ceylon Petroleum Corporation (CPC) has already taken initial steps by requesting a sample of WTI (West Texas Intermediate) crude oil, the benchmark crude used in the U.S. to assess its compatibility with Sri Lanka’s refining infrastructure. Currently, Sri Lanka imports 180,000 tonnes of crude oil and approximately 200,000 tonnes of refined fuel products.
CPC sources noted that it typically takes around 21 days for a U.S.-based shipment to reach Sri Lankan ports. Despite the logistical time frame, private U.S. oil companies have shown interest in participating in Sri Lanka’s fuel tenders, marking a potential shift in sourcing strategy.
Sri Lanka’s intent to diversify oil suppliers also aligns with its broader strategy to secure long-term energy security, increase competitive bidding, and meet foreign exchange goals. Reducing the trade surplus could play a vital role in future trade and diplomatic negotiations with Washington.
