The prices of petrol and diesel in India largely depend on which country we are buying crude oil from and at what price. On this front, there has been such a big reversal in the month of May, which has shocked the oil market of the entire world. The countries from which India used to buy the most oil till yesterday, have now been left behind. In fact, Venezuela has emerged as the third largest country supplying crude oil to India. This Latin American country has defeated even the big oil producers like Saudi Arabia and America in the race. Republican and domestic refinery companies, especially Reliance Industries, have shown huge momentum in purchasing cheap and heavy grade Venezuelan crude, due to which this entire equation has changed.
Oil ships turned towards India as soon as the ban was lifted
According to data from energy cargo tracker ‘Kpler’, Venezuela has supplied 4,17,000 barrels of crude oil daily to India so far in the month of May. If we compare it with the previous month i.e. April, then this supply was only 2,83,000 barrels per day (bpd). This means that in just 20 days the oil coming from Venezuela has increased by about 50 percent. The most interesting thing is that for nine consecutive months last year, India did not buy even a single drop of oil from Venezuela. A few weeks after the arrest of Venezuelan President Nicolas Maduro in January this year, when America relaxed the restrictions on oil exports from there, this supply was restored again last month and now it has reached a record level.
Saudi Arabia’s arrogance and expensive oil spoiled the game
Saudi Arabia has suffered a major setback in this entire game, which was once India’s third largest oil producer. Even before the Iran war broke out in February, India was taking large quantities of oil from Saudi Arabia. But in May, oil coming from Saudi Arabia has reduced to only 3,40,000 barrels per day, which was 6,70,000 barrels per day in April. Kpler experts believe that Saudi Arabia kept its oil prices very aggressive (expensive), due to which Indian buyers distanced themselves from it and preferred cheap Venezuelan crude. From the common man’s point of view, Indian refining companies will go to wherever they can get economical deals so that the cost of fuel in the country can be controlled.
Reliance’s Gujarat refinery gets the desired deal
Venezuelan crude oil is slightly heavy and high-sulphuric. Cleaning it is not within everyone’s reach. According to Nikhil Dubey, chief refining analyst at Kepler, Indian buyers have always been interested in Venezuelan oil because it is very affordable for the pocket. However, India’s government and other small refineries can process only very limited quantities of this heavy grade oil. But this oil is absolutely suitable for the modern and complex refinery of Reliance Industries located in Gujarat. This is the reason why Reliance took full advantage of this opportunity and increased the stock of cheap crude oil.
India’s oil map changed amid the crisis in Gulf countries
If we talk about India’s total oil import, it has registered an increase of 8 percent on month-on-month basis in May and has reached 4.9 million barrels per day (mbd). However, this figure is still 5 percent less than February’s level of 5.2 mbd, as the Iran war in West Asia has severely affected sea routes and shipments. America had also lifted sanctions on Iran in April, due to which India had imported oil from there after seven years, but due to the US Navy blockade, not a single ship from Iran could come to India in May. On the other hand, due to the closure of the Strait of Hormuz, the oil coming from Iraq almost dried up in April, but there was some relief in May and the supply of 51,000 barrels per day from Iraq reached India, which used to be 9,69,000 barrels per day in February. Amidst this entire crisis, after Russia and UAE, Venezuela has now emerged as a strong pillar of India’s energy security.
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