Choked by Gulf conflict, India turns to Venezuela as third-largest crude supplier

Venezuela has emerged as India's third-largest crude oil supplier in May, overtaking Saudi Arabia and the United States, as Indian refiners turned to cheaper heavy crude amid ongoing disruptions caused by the West Asia conflict.

Also read: Stock markets slump in early trade on surging oil prices amid rising West Asia tensions

According to energy cargo tracker Kpler, the Latin American nation supplied around 4,17,000 barrels per day (bpd) to India this month, sharply up from 2,83,000 bpd in April and compared with zero supplies during the previous nine months. Russia and the UAE retained their positions as India's top two suppliers.

Why Venezuela, why now?

The surge follows the US easing of restrictions on Venezuelan oil exports after the January capture of its president, Nicolás Maduro. Price is the primary driver. Venezuelan crude is currently cheaper than most global grades, making it attractive for refiners navigating elevated costs and geopolitical uncertainty.

The Economic Times quoted Nikhil Dubey, Kpler's lead analyst-refining, as saying, "Indian buyers have historically shown strong interest in Venezuelan barrels due to their attractive economics and compatibility with complex refining systems."

Also Read: India holds all 50 spots on world's hottest cities list

Reliance Industries' Jamnagar refinery in Gujarat is among the biggest beneficiaries, given its advanced infrastructure capable of efficiently processing heavy, high-sulphur Venezuelan crude.

Saudi's shipments to India nearly halved to 3,40,000 bpd in May from 6,70,000 bpd in April, largely due to aggressive pricing that made its crude less competitive.

Hormuz fallout reshapes imports

India's overall crude imports rose eight per cent month-on-month to 4.9 million bpd in May, though still below the 5.2 million bpd recorded in February before the Iran war disrupted regional shipping.

Iraqi supplies collapsed from 9,69,000 bpd in February to just 51,000 bpd this month, thanks to the disruptions in the Gulf.

Iranian crude, briefly resumed in April after a seven-year gap following US sanctions relief, has halted again due to the US naval blockade of Iranian ports.

Also Read: BJP defends Rs 3 fuel hike, says India shielded its citizens better than global peers

According to reports, India currently holds around 60 days of petroleum supplies, including strategic reserves. Saudi and UAE crude is now being rerouted through alternative pipelines, bypassing the Strait, though at higher freight costs and longer shipping times.

Analysts expect Russian and Venezuelan barrels to play an increasingly larger role in the coming months amid persisting geopolitical uncertainty.