The Indian Crude Oil Market may just have gotten Christmas early this season as they endeavour to resume the purchase of oil with Venezuela.
The Oil Minister Hardeep Singh Puri said on Friday that India will buy Venezuelan oil as some refineries in India are capable of processing heavy crude oil.
Has the USA’s removal of the Venezuelan Oil Sanction worked in India’s favour?
Just before the 2024 elections, the Biden Administration had paved the way for the easing of sanctions on the Venezuelan Oil sector which came as a response to the united deal between the government and the opposition parties about the 2024 election.
The US had issued a 6-month general license allowing for the production, sale and export of Venezuela’s crude and gas without limitation on customer or destination and any other general license authorizing dealing with Minerva- The Venezuela state-owned gold mining company.
Amidst Saudi Arabia’s and Russia’s deeper cuts, this came as a boon and has potentially opened the doors for India’s oil imports.
What’s the Crude Oil Import Scenario India’s lining up?
India has had a rich history of importing crude oil from Venezuela and their last was in 2020.
In the latest press conference, Mr Puri said
” Many of our refineries, including Pradip, are capable of using that Heavy Venezuelan Oil. We will buy (Venezuelan oil). “
India being the world’s 3rd biggest oil importer and consumer, shipping over 80% of its oil needs from overseas, is poised to cut its crude import bill. In addition there is also a plan to expand its refining.
Mr. Puri, the oil minister further specified that India was willing to buy oil from any country that is not sanctioned.
He further went on to say
” India currently refined 5 million barrels per day of oil and the country’s refining capacity is rising. If Venezuelan oil comes to the market we will welcome it”.
The Minister also added an interesting detail which was pertaining to some Indian money locked up in Venezuela. He was referring to India’s Oil and Natural Gas Corp while making this statement and as per records that is more than $500 million in dividends pending since 2014 for its stake in Venezuelan projects.
An Economic Outlook from Commodity Samachar:
This news is truly something noteworthy and our team didn’t miss out on a chance to comment on the same.
Commodity Samachar’s Head of Research Ankit Kapoor had this to say about the decision.
” Firstly, I would like to quote something the then PM Manmohan Singh stated “India faces “formidable ” challenges on the energy front and spiraling crude oil prices internationally have put a strain on the country’s import bill.
The decision by India is a welcome one as this could potentially bring down prices in Imports. India’s crude retail sector consumes about 96 % which encompasses transport fuel amounting to the most.
By 2030 India wants to reduce the dependency in their retail sector and push towards electric or other environment friendly models so as to bring down the debt.
Currently most of India’s debt lies in crude oil imports and hence, this deal could help bring down some of that in the coming years until 2030 when India may potentially achieve at least 35% in the green energy sector or 12 – 15% depending on the situation.
However this decision’s effect could indirectly affect the Indian economy in a positive way but wouldn’t be penetrating to the prices of the consumers in the country”
Commodity Samachar
Learn and Trade with Ease
Also Read: Forex News Letter: Can PMI Data Work its Positive Magic in the Market?, Copper Price Surges: Will the Momentum Hold or Fold?
Recommended Read: All Roads Lead to the US: What’s the Future of the US leading up to the Fed meeting?
Want Help On Your Trades?
Chat With Our Analyst