India's Venezuelan oil imports are set to surge to their highest level in almost seven years this month, driven by steep discounts that are attracting major refiners. According to Kpler estimates, Venezuelan crude deliveries to India are expected to more than double to about 465,000 barrels a day this month, compared to 196,000 barrels a day in September. If all scheduled cargoes arrive on time, this would mark the highest import levels since December 2019. The surge comes as India resumed buying Venezuelan oil in February after an almost yearlong pause, as the lifting of US sanctions following the ouster of former leader Nicolás Maduro boosted flows. As reported by The Hindu BusinessLine, this represents a significant shift in India's crude import strategy as refiners seek more affordable alternatives to traditional suppliers.
All Venezuelan cargoes bound for India are listing Sikka as their destination, the port used by Reliance Industries Ltd for its Jamnagar refinery complex, the world's biggest. As reported by The Hindu BusinessLine, actual October flows could vary, with at least two tankers scheduled to arrive on India's west coast on October 31. A Reliance spokesperson didn't immediately respond to requests for comment. According to Kpler, Sumit Ritolia, senior manager of modeling at Kpler, expects October deliveries to be closer to 350,000 barrels a day as some vessels may not discharge before month-end, noting that these barrels are relatively difficult, heavy barrels, and not every Indian refinery can process them continuously or in large proportions. The complex nature of these heavy crude oils requires specialized processing capabilities, with Reliance's Jamnagar complex being uniquely equipped to handle such barrels.
Indian refiners have dramatically cut back Russian crude purchases for November delivery as surging prices drive buyers toward alternative suppliers. According to people familiar with the matter, Russian crude is being offered at premiums of more than $10 a barrel to Dated Brent, a sharp reversal from the steep discounts that previously made these barrels attractive to Indian refiners. As reported by The Hindu BusinessLine, Russian Urals crude, which was once a mainstay for Indian refiners, is now priced almost at par with West Asia grades. This pricing shift has prompted Indian refiners to turn back to Persian Gulf suppliers, with some cargoes also being offered to Chinese independent refiners. Moscow's share of India's crude imports fell to about 35% in September from as high as 56% in July, with shipments averaging just 310,000 barrels a day in the four weeks through October 4, the lowest since March 2022. According to Bloomberg tanker-tracking data, the oil ministry did not immediately respond to requests for comment regarding the import cuts.
The surge in Venezuelan imports comes as Russian supplies become costlier, with Merey crude, Venezuela's flagship, selling at a discount of about $16 a barrel to ICE Brent, while freight to India's west coast adds about $33 a barrel. By comparison, Russian Urals is trading at a premium before shipping costs. The steep discount helps offset the longer voyage from Venezuela and processing challenges of Merey, a dense, high-sulfur crude. Kpler reports that Venezuelan crude has become an increasingly important part of India's diversification since the start of the year, with refiners in the South Asian nation also cutting back Russian purchases after a sweeping US sanctions law raised the threat of fresh punitive tariffs. According to Bloomberg, China and India remain the biggest buyers of Russian crude, while many cargoes are assigned a final destination only after they are well into their voyage.
While Venezuelan oil is more affordable, it presents processing challenges for some refineries, and rising tanker rates could make the surge in imports difficult to sustain. As reported by Business Standard, the Indian shift toward West Asia crude stands to intensify competition for Gulf barrels as Asian refiners secure supplies for the final months of the year. "India has certainly been diversifying its crude slate, with more barrels coming from the West Asia and the Americas," said Sumit Ritolia of Kpler. Meanwhile, West Asia flows have risen as more tankers navigate the Strait of Hormuz despite still-elevated risks from increasing Iranian attacks on shipping, with volumes recovering to about 80% of prewar levels. Gulf barrels benefit from shorter voyages and lower shipping costs, adding to their appeal for Indian buyers at a time when tanker freight rates are surging. According to Shell Plc Chief Executive Officer Wael Sawan, Gulf barrels also benefit from shorter voyages and lower shipping costs, adding to their appeal for Indian buyers at a time when tanker freight rates are surging.
