Venezuela Becomes India's Third-Largest Crude Supplier In May, Overtakes Saudi Arabia And US

Venezuela has climbed to become India's third-largest crude oil supplier in May, overtaking traditional heavyweights Saudi Arabia and the United States. Only Russia and the UAE supplied more crude to India this month.

The South American country delivered around 417,000 barrels per day (bpd) to India so far in May, sharply up from 283,000 bpd in April and zero supplies during the previous nine months. Reliance Industries and other Indian refiners have been driving the purchases, drawn by the attractive pricing of Venezuelan crude grades.

Why India Is Buying More From Venezuela

The primary reason is cost. Venezuelan crude is currently priced lower than many other global grades. This makes it more attractive for Indian refiners dealing with high crude prices and ongoing supply uncertainty.

Analysts say Indian buyers have often preferred Venezuelan barrels in the past. The reason is simple. The economics are better, and the crude works well with complex refining systems.

Venezuelan crude is heavy and high in sulphur content, which limits its use at most Indian refineries. However, Reliance Industries' advanced refinery in Jamnagar, Gujarat, is particularly well suited to process this grade, making it one of the biggest beneficiaries of the resumed supply.

Supplies from Venezuela had resumed last month after the US eased restrictions on its exports, following the capture of Venezuelan president Nicolas Maduro in January.

India's Overall Imports Rise, But Still Below Pre-War Levels

India's total crude oil imports rose 8% month-on-month to around 4.9 million barrels per day in May, according to energy cargo tracker Kpler. Despite the uptick, imports remain about 5% below the 5.2 million barrels per day recorded in February, before the Iran war disrupted shipments from West Asia.

Iraq Recovers Partially, Iran Goes Silent Again

Some Iraqi crude cargoes managed to reach India in May after the near closure of the Strait of Hormuz had dried up shipments the previous month. India received around 51,000 bpd from Iraq so far in May, a fraction of the 969,000 bpd recorded in February.

India had briefly resumed crude imports from Iran in April after the US eased sanctions, marking the first such purchases in nearly seven years. Those shipments have now stopped again. No Iranian cargoes have arrived this month following a US naval blockade around Iranian ports amid the ongoing conflict.

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Saudi Arabia Loses Ground

Saudi Arabia, which was India's third-largest crude supplier before the Iran conflict erupted in late February, has seen its shipments to India nearly halve. Supplies dropped to around 340,000 bpd in May from 670,000 bpd in April. According to analysts, the aggressive pricing of Saudi crude made it less competitive compared to Venezuelan barrels in the current environment.

The wider scramble for crude in India shows how fast Indian refiners are having to adapt to geopolitical tensions, sanctions and price dynamics. Cheaper Venezuelan crude provides some relief to refiners struggling with margin pressure in a volatile global energy market as domestic petrol and diesel prices rise and the rupee weakens.

Sources:

The Economic Times

India Today