Russia will be shocked by US decision, India will take this step for cheap petrol!

Before the US sanctions, India was a regular customer of Venezuelan crude oil. During the pre-Covid period from 2017 to 2019, India imported about 300,000 bpd of Venezuelan oil. In which private refiners were the major buyers. This import was about 5-7 percent of India's total crude oil imports during that time.

The US has taken a decision which may cause a big blow to Russia. Yes, India can now import cheaper oil from Venezuela by reducing the supply from Russia. In fact the US has lifted sanctions from Venezuela. Because of which Venezuela will no longer have any problem in exporting crude. Besides, it will also sell oil at discount to increase its earnings. Which will benefit India. By the way, Russian oil is also costing India around $80 now. At the same time, questions are being raised regarding the method of payment between the two countries.

According to a report by S&P Global Commodity Insights, the US has relaxed sanctions on oil from the Latin American country Venezuela. After which Indian refiner companies can import crude oil from Venezuela at concessional rates. The report said that little change in Venezuela's oil production capacity is expected in the next six months. The report says that the country's government oil company PDVSA does not have money to repair its oil infrastructure. The oil machinery is quite damaged. Venezuela's current capacity is between 800,000 and 850,000 barrels per day (bpd) and production is about 750,000 bpd.

Venezuela is India's old supplier

The report said that before the US sanctions were imposed, India was a regular customer of Venezuelan crude oil. During the pre-Covid period from 2017 to 2019, India imported about 300,000 bpd of Venezuelan oil. In which private refiners were the major buyers. S&P Global data shows that these imports were about 5-7 percent of India's total crude oil imports during that period. According to Sumeet Ritolia of S&P Global, Indian refineries can consider Venezuela to import cheap oil. He said, if the refining economics remains with Venezuelan crude oil, then Indian refiners may move away from their existing sources towards Venezuela.

American oil companies also benefit

On October 18, the US Treasury Department eased oil, trade and financial sanctions on Venezuela, according to Ha Nguyen, executive director of Global Crude Oil Markets at S&P Global Commodity Insights. The Treasury has given the 'General License' for six months. Now American oil companies have now got permission to explore investment in Venezuela. American oil refiners will now be able to buy oil directly from Venezuela's state oil company PDVSA. During this time, less Venezuelan crude may go to China – where it is used to repay debt – and more to the US to generate cash.

Demand for oil has increased

According to Petroleum Planning and Analysis Cell data, during January-September, India's oil demand increased 5.6 percent year-on-year to 171.34 million tonnes or 4.9 million bpd. In the same period, demand for diesel and gasoline increased by 6.5 percent and 7.4 percent. This year there has been an increase of 20.5 percent in demand for jet fuel. India has diversified its sources of oil imports in the last few years. After February 2022, Russia has emerged as the top seller of crude oil to India. In FY 2022, the share of Russian oil in India's total oil imports was only 2 percent. In the financial year 2023, it had increased to almost one-fourth. Other major suppliers to India include Iraq, Saudi Arabia, America and United Arab Emirates.