Not Saudi, not US: India's newest major oil supplier may surprise you

Venezuela has emerged as India’s third-largest crude oil supplier in May, overtaking traditional heavyweights Saudi Arabia and the United States, as Indian refiners increased purchases of cheaper Venezuelan crude amid ongoing disruptions in global oil markets. According to data from energy cargo tracker Kpler, Venezuela supplied around 417,000 barrels per day (bpd) of crude oil to India so far this month, sharply higher than 283,000 bpd in April. The South American country had supplied no crude to India during the previous nine months. Read Full Story The jump comes at a time when India is reshuffling its crude oil sourcing strategy due to the ongoing West Asia conflict, disruptions around the Strait of Hormuz and changing global supply dynamics. Only Russia and the United Arab Emirates supplied more crude oil to India than Venezuela in May. WHY INDIA IS BUYING MORE OIL FROM VENEZUELA The main reason behind the surge is price. Venezuelan crude is currently cheaper than many other global oil grades, making it attractive for Indian refiners dealing with elevated crude prices and geopolitical uncertainty. “Indian buyers have historically shown strong interest in Venezuelan barrels due to their attractive economics and compatibility with complex refining systems,” Nikhil Dubey, Lead Analyst-Refining at Kpler, said, as quoted by The Economic Times (ET). Indian refiners, especially Reliance Industries, are among the biggest buyers because Venezuela’s heavy and high-sulphur crude suits complex refinery systems such as Reliance’s Jamnagar refinery in Gujarat. Most Indian refiners can process Venezuelan crude only in limited quantities, but Reliance’s advanced refining infrastructure makes it one of the biggest beneficiaries. INDIA’S OIL IMPORTS RISE, BUT STILL BELOW PRE-WAR LEVELS India’s overall crude oil imports rose 8% month-on-month to around 4.9 million barrels per day in May, according to Kpler data. However, imports still remain below the 5.2 million barrels per day recorded in February, before the Iran war disrupted energy shipments from West Asia. The near closure of the Strait of Hormuz had severely impacted oil shipments from key Middle East suppliers earlier this year. Although some Iraqi crude cargoes resumed this month, volumes remain sharply lower. India received only around 51,000 bpd from Iraq so far in May, compared to nearly 969,000 bpd in February. IRAN SUPPLIES HALTED AGAIN India had briefly resumed crude imports from Iran in April after the US eased sanctions restrictions earlier this year. That marked the first Iranian oil imports into India in nearly seven years. However, those shipments have once again stopped. No Iranian cargoes have arrived in India this month following the US naval blockade around Iranian ports amid the ongoing conflict. The disruption forced Indian refiners to look for alternative sources, benefiting suppliers such as Venezuela and the UAE. SAUDI ARABIA LOSES GROUND Saudi Arabia, which was India’s third-largest crude supplier before the Iran conflict began in February, has seen supplies to India drop sharply. Saudi shipments nearly halved to around 340,000 barrels per day in May from 670,000 bpd in April. Analysts say aggressive pricing of Saudi crude made it less competitive compared to Venezuelan barrels. “This happened primarily due to the aggressive pricing of Saudi barrels,” Dubey said. India is the world’s third-largest importer and consumer of crude oil and depends heavily on imports to meet its energy needs. The ongoing reshuffle in crude sourcing highlights how geopolitical tensions, sanctions and oil prices are forcing Indian refiners to rapidly diversify supply sources. The development also comes at a time when petrol and diesel prices have risen in India,the rupee has weakened sharply,and inflation concerns are increasing due to elevated crude oil prices. Cheaper Venezuelan crude may provide some relief to refiners facing margin pressure amid volatile global energy markets. Ends