Foreign News
Venezuela Crude Returns To India’s Oil Basket
Five supertankers carrying roughly 10 million barrels of Venezuelan crude are heading towards India, as imports from the South American producer surge while Russian supplies retreat from recent highs.
India’s Venezuelan crude imports climbed to about 358,000 barrels per day in August, their highest monthly level since 2020, according to Kpler data. The increase of roughly 64% from July pushed Venezuela ahead of Saudi Arabia into third place among India’s crude suppliers.
Russian crude arrivals fell to about 2.06 million barrels per day in August, down around 27% from July. Russia remained India’s largest supplier, but the decline opened room for alternative sources including Venezuela, Brazil, the United Arab Emirates, Iraq, Angola and Nigeria.
For Indian refiners, Venezuelan crude is not unfamiliar. Its heavy grade has long suited refineries capable of processing difficult crude at competitive prices.
The relationship was disrupted after Washington tightened sanctions on Venezuela’s state oil company PDVSA. Indian purchases declined and eventually disappeared for extended periods as sanctions, payment restrictions and uncertainty over Venezuelan production complicated the trade.
The easing of US restrictions has reopened channels for Venezuelan crude to reach international buyers. Indian refiners, particularly private-sector companies, have moved quickly to take advantage of the opportunity.
The revival also coincides with a broader opening of Venezuela’s petroleum industry to foreign companies.
ONGC is preparing to invest around $200 million in the San Cristobal oilfield, where production has fallen sharply from earlier levels, according to previous reports. The Indian state-owned producer is targeting a substantial increase in output as Venezuela attempts to rebuild an oil industry affected by years of underinvestment, operational problems and sanctions.
Chevron, Eni, GeoPark and other international energy companies are also negotiating or preparing new agreements in Venezuela. Under the country’s amended hydrocarbons framework, foreign operators are being offered greater flexibility to run fields, export crude and receive sale proceeds directly.
India already has a long-standing upstream presence in Venezuela and has invested in projects alongside PDVSA and other partners.
Under the new US-controlled framework, proceeds from Venezuelan oil sales are being routed into accounts controlled by the US Treasury. The funds remain associated with Venezuela and its state oil company rather than becoming US government revenue, but Washington controls their custody and disbursement.
The arrangement gives the United States significant control over Venezuela’s most important source of foreign exchange and changes the financial framework surrounding Venezuelan crude exports.
When an Indian refiner buys Venezuelan crude today, the transaction takes place within a financial system shaped by Washington. The oil may sail from Venezuela to India, while proceeds can pass through a system overseen by US authorities.
This is a major departure from the earlier PDVSA model and reflects the changed political and financial structure surrounding Venezuela’s oil industry.
The US is the world’s largest oil producer and exports substantial volumes of crude. Most Venezuelan crude is heavy and sour, meaning it is dense and contains relatively high levels of sulphur. A large portion of US shale production, by contrast, is light and sweet.
Many refineries along the US Gulf Coast were built or upgraded to process heavier crude grades from Venezuela, Mexico and Canada.
The growth of US shale production increased domestic supplies of light crude, but refining demand for heavier feedstock remained. Venezuelan oil therefore retains importance for refineries configured to process heavier grades.
Washington’s renewed involvement also gives it greater influence over Venezuela, which for years deepened its relationships with China, Russia and other US rivals. The US is also seeking to rebuild its Strategic Petroleum Reserve.
For India, the revival of Venezuelan supplies comes as Russian crude remains central to its energy imports. The sharp growth of Russian imports since 2022 has also exposed Indian refiners to geopolitical and sanctions-related risks.
August’s figures show greater diversification. Indian purchases from Venezuela increased sharply while Russian imports declined. UAE supplies also rose, while Angola recorded a particularly strong increase. US crude continued to flow to India.
The figures do not indicate that Indian refiners are leaving Russian oil. Instead, refiners are expanding the range of crude grades and suppliers available to them as global supply routes change.
Venezuelan crude offers another advantage because of its heavy composition. Indian refiners with complex configurations can process heavy crude and extract value from discounted grades that may be less attractive to simpler refineries.
The scale of today’s Venezuelan imports is reminiscent of 2017. Venezuela was already facing severe economic difficulties, but its oil relationship with India remained strong. Indian refiners were buying hundreds of thousands of barrels per day from Caracas. Venezuelan crude imports peaked at roughly 445,000 barrels per day in August 2017, according to industry data.
Venezuela was therefore a significant part of India’s crude basket rather than a marginal supplier.
Indian oil companies also had interests in the country. ONGC Videsh had invested in Venezuelan upstream assets, including the San Cristobal project, while Indian companies participated in joint ventures aimed at developing Venezuela’s Orinoco heavy-oil resources.
The commercial rationale was straightforward: Venezuela possessed huge reserves of heavy crude, while India was expanding a refining system capable of processing it.
The relationship subsequently unravelled. Venezuelan production deteriorated, infrastructure suffered from inadequate investment, and political and economic turmoil intensified. US sanctions then made international transactions increasingly difficult, forcing India and other buyers to reduce their exposure.
The return of Venezuelan crude does not mark a return to 2017. Venezuela is now re-entering the market under a different political and financial structure. US influence over oil revenues is greater, international companies are being invited back into fields once dominated by PDVSA, and Washington is shaping how Venezuelan production is sold and how the proceeds are handled.
But the arrival of such a large consignment of oil helps India’s attempt to diversify its energy sources in uncertain times.
