Venezuela, India’s fifth largest crude oil supplier
In February, Indian refiners took advantage of the US sanctions waiver on Venezuela to increase crude oil imports from the South American country to over 175,000 barrels per day (b/ d), making it the fifthlargest supplier.
Trade sources and refiners said that imports are continuing at a “healthy pace” during March but at lower levels compared with last month. After the US lifted sanctions on Venezuela for six months—beginning October 18, 2023—India has been procuring cargoes from December 2023, after a hiatus of over three years, emerging as the largest buyer of crude oil in January 2024 from the country with the world’s largest proven oil reserves.
As per energy intelligence firm Kpler, the world’s third largest importer secured more than 2,54,000 b/d in January and over 1,91,000 b/d in December 2023 from Venezuela. Until 2019, India was Venezuela’s third largest purchaser, after the US and China, importing roughly 3,00,000 b/d on average.
SECURING CARGOES
Viktor Katona, Kpler’s Lead Crude Analyst, told businessline that Indian refiners exploited the US sanctions waiver in less than a month after the lifting of sanctions. India’s refining system is one of the most sophisticated in the world, so the likes of Reliance Industries (RIL) or Indian Oil Corporation (IoC) would want to buy heavier grades, even with higher levels of sulphur, because they can convert residue into diesel and gasoline, the highvalue products, he explained.
Even though RIL took the lead in February, importing two very large crude carriers (VLCCs), IoC and HPCLMittal Energy (HMEL) also participated in sharing one VLCC tanker worth of cargo. RIL bought its first cargo that was already loaded in early December 2023 (aboard M/T Gustavia S).
When asked about the scenario in March, Katona said, “After Indian buyers received three cargoes in February, March should see the arrival of three new cargoes again (of this, two have already discharged to Jamnagar Nissos Kea and Eurohope), whilst one Phoenix Vigor is en route and should start discharging March 31. So after a threeyear high of 1,75,000 b/d in February, March should see a marginal decline to 1,55,000 b/d.” Back in the day when Venezuelan grades were offmarket and only Chinese buyers were in, a cargo of Merey would be priced around $20 a barrel to Brent, however, by now, with Venezuelan crude trading freely, a cargo of Merey would be discounted only to $8 to Brent. So the sanctions waiver also lifted Venezuelan prices massively, he added.
However, the threat of reimposition of sanctions by the US, after April 18, due to no visible progress between Venezuela’s President Nicholas Maduro and Unitary Platform, particularly on allowing all presidential candidates to compete in the election, has threatened to impact the trade. But, an official with a domestic refiner said that so far imports are continuing and even if sanctions are imposed, the impact on imports would ‘not be substantial’.