A major shake-up has occurred in the crude oil market. (Image X @Osint613)
New Delhi: A major shake-up has occurred in the crude oil market. The list of countries supplying the most oil to India has suddenly undergo a major change. This time, neither the traditional supplier—Saudi Arabia—nor the United States managed to take the lead. Instead, another nation entirely has surpassed both of these countries. In the month of May, it emerged as India's third-largest oil supplier.
Amidst the ongoing turbulence in the global oil market, Indian companies have aggressively purchased low-cost oil from this nation. According to data from the energy cargo tracker Kpler, this country is Venezuela. In May, Venezuela supplied approximately 417,000 barrels of crude oil per day to India. This figure stood at just 283,000 barrels in April. What is most surprising is that, prior to this, there had been absolutely no crude oil supplies from Venezuela to India for nine consecutive months.
In fact, due to ongoing tensions in West Asia and disruptions to supplies around the Strait of Hormuz, India has altered its oil procurement strategy. In this context, Venezuela has emerged as a significant ally for India. In terms of oil supplies to India during May, only Russia (ranked No. 1) and the United Arab Emirates (UAE)—ranked No. 2—finished ahead of Venezuela; all other suppliers were left behind.
The primary driver behind this major shift is the price of oil. Venezuelan crude oil is currently available at a significantly lower cost compared to supplies from other nations. According to Nikhil Dubey, a lead analyst at Kpler, Indian buyers have historically favored Venezuelan oil because it fits perfectly within their budgetary constraints. Within India, Reliance Industries is the largest purchaser of this oil. Venezuelan crude is characterized as "heavy" and high in sulfur content—making its refining a complex process that not every refinery is equipped to handle. However, Reliance's advanced refinery, located in Jamnagar, Gujarat, is capable of processing this oil.
On the other hand, Saudi Arabia—historically India's largest oil supplier—has now fallen behind. Prior to the onset of the Iran crisis in February, Saudi Arabia had firmly held the third position among suppliers. However, in May, its oil supplies plummeted to nearly half their previous levels. In April, Saudi Arabia supplied India with 670,000 barrels of oil per day; by May, this figure had dropped to a mere 340,000 barrels. Experts attribute this shift to the fact that Saudi oil was more expensive, prompting Indian companies to bypass it in favor of Venezuela's cheaper crude.
Amidst this upheaval, oil supplies from Iraq and Iran have also suffered a major blow. Although some oil shipments from Iraq resumed in May, the volume remained significantly lower compared to previous levels. In February, India was importing approximately 969,000 barrels of oil per day from Iraq; by May, this figure had plummeted to just 51,000 barrels. Meanwhile, following a relaxation of U.S. sanctions, India had resumed purchasing oil from Iran in April—the first such transaction in seven years—but supplies from Iran came to a complete halt once again in May due to a blockade by the US Navy.
Today, India ranks as the world's third-largest consumer of oil. Currently, domestic prices for petrol and diesel remain elevated, the Indian Rupee has depreciated significantly against the US Dollar, and the specter of inflation continues to loom large. In these challenging times, the affordable oil being sourced from Venezuela is providing substantial relief to Indian refining companies, shielding them from potentially massive financial losses.
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