Venezuela turned India’s fifth largest crude oil provider in February

Indian refiners exploited the US sanctions waiver on Venezuela to import greater than 1,75,000 barrels per day (b/d) crude oil from the South American nation making it the fifth largest provider in February.

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Commerce sources and refiners mentioned that imports are persevering with at a “well being tempo” throughout March, however at decrease ranges in comparison with final month. After the US lifted sanctions on Venezuela for six months—starting October 18, 2023—India has been procuring cargoes from December 2023, after a hiatus of over three years, rising as the biggest purchaser of crude oil in January 2024 from the nation with the world’s largest confirmed oil reserves.

As per vitality intelligence agency Kpler, the world’s third largest importer secured greater than 2,54,000 b/d in January and over 1,91,000 b/d in December 2023 from Venezuela. Till 2019, India was Venezuela’s third largest purchaser, after the US and China, importing roughly 3,00,000 b/d on a median.

Securing cargoes

Viktor Katona, Kpler’s Lead Crude Analyst instructed businessline that Indian refiners exploited the US sanctions waiver in lower than a month after the lifting of sanctions. India’s refining system is likely one of the most refined on this planet, so the likes of Reliance Industries (RIL) or Indian Oil Company (IoC) would truly wish to purchase heavier grades, even with increased ranges of sulphur, as a result of they will convert residue into diesel and gasoline, the high-value merchandise, he defined.

Although RIL took the lead in February, importing two very massive crude carriers (VLCCs), IoC and HPCL-Mittal Vitality (HMEL) additionally participated sharing one VLCC tanker price of cargo. RIL purchased its first cargo that was already loaded in early December 2023 (aboard M/T Gustavia S).

When requested in regards to the state of affairs in March, Katona mentioned, “After Indian patrons acquired three cargoes in February, March ought to see the arrival of three new cargoes once more (of this, two have already discharged to Jamnagar – Nissos Kea and Eurohope), while one Phoenix Vigor is en route and will begin discharging March 31. So after a three-year excessive of 1,75,000 b/d in February, March ought to see a marginal decline to 1,55,000 b/d.”

Again within the day when Venezuelan grades have been off market and solely Chinese language patrons have been in, a cargo of Merey can be priced round $20 a barrel to Brent, nevertheless, by now, with Venezuelan crude buying and selling freely, a cargo of Merey can be discounted solely to $8 to Brent. So the sanctions waiver additionally lifted Venezuelan costs massively, he added.

Reimposing sanctions

Nonetheless, the specter of reimposition of sanctions by the US, after April 18, as a consequence of no seen progress between Venezuela’s President Nicholas Maduro and Unitary Platform, notably on permitting all presidential candidates to compete within the election, has threatened to affect the commerce. However, an official with a home refiner mentioned that to date imports are persevering with and even when sanctions are imposed, the affect on imports would ‘not be substantial’.

Final month, ICRA Senior VP & Co-Group Head Company Rankings Prashant Vasisht mentioned that Venezuela accounts for under about 4-5 per cent of India’s total imports, in addition to which the low cost accessible is low on a landed foundation. Accordingly, even when sanctions are reimposed by the US, Indian refiners can simply shift to West Asian alternate options.

Katona mentioned that “curiously sufficient” the market expectation was that India would wind down purchases of Venezuelan cargoes with the looming deadline by which the White Home would want to determine if it extends the sanctions waiver for an additional six months or goes for a sanction snapback.

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“Nonetheless, there have been two cargoes in March already that loaded Venezuelan Merey and are heading in the direction of India, one in the direction of Jamnagar, the opposite in the direction of Paradip, the tankers are Caspar and Nissos Tinos, respectively. Each will arrive round April 24-25, so one week after the potential sanctions snapback date. This underscores the assumption that Indian refiners have within the sanctions being prolonged,” he opined.