India suddenly changed its oil strategy amid the West Asia crisis, tension in the Strait of Hormuz and rising Saudi oil prices. Venezuela has now become India’s third largest crude oil supplier. Cheap heavy crude, Russia-Iran supply crisis and energy security changed the global oil game.
New Delhi: The equations of the global energy market have changed overnight. India has taken a surprising step in its oil sourcing strategy which has left even the traditional oil giants like Saudi Arabia and the US stunned. Amidst the changing geopolitical tensions and the chaos on the sea lanes of West Asia, India’s new favorite oil supplier is no longer a Gulf country or a superpower, but a country that has been facing the brunt of sanctions for a long time. The latest and sensational data from energy cargo tracker ‘Kpler’ has made policy makers all over the world think.
Turmoil in Gulf countries: Saudi Arabia’s stake ‘halved’, America too surprised!
The change in India’s crude oil import pattern in the month of May is no less than a major political upheaval. Saudi Arabia, which till now has been among India’s top suppliers, has suffered a major setback this month. While Saudi Arabia was sending 670,000 barrels per day (bpd) of oil to India in April, it came down to just 340,000 bpd in May. According to analysts, Saudi Arabia’s ‘aggressive pricing policy’ (expensive oil) became the main reason for its decline. America was also left behind in this race, because India has increased its steps towards heavy crude oil available at concessional rates.
9 months of silence and then… that ‘dangerous’ return of Venezuela!
The biggest suspense of this entire story is the explosive entry of Venezuela. For the last nine consecutive months, not a single drop of oil was supplied to India from Venezuela. But what happened in the first 20 days of May changed history. Venezuela made a sudden jump by sending about 417,000 barrels per day (bpd) of crude oil to India, making it the country’s third largest oil supplier. Taking advantage of the temporary relaxation of US sanctions, Indian refiners snapped up Venezuela’s low-priced heavy crude, pushing Venezuela’s global exports to their highest level since 2018.
Maze of Hormuz Strait: Why did India have to change its masterplan?
After all, why did India have to make such a big change in its strategy? The answer lies in the ongoing serious military standoff in the sea routes of West Asia. Increasing tensions and blockade around the Strait of Hormuz have forced Indian refineries to diversify their options. The situation is so critical that supplies from Iraq, another major supplier, fell from 969,000 bpd in February to just 51,000 bpd in May. At the same time, the shipment of Iranian oil, which started in April after seven years, also came to a halt again this month due to the US naval blockade.
Reliance’s ‘Super Game’ and Russia-UAE’s continued dominance
This race to import oil from Venezuela has been fueled mainly by big private refineries like Reliance Industries based in Gujarat. Reliance’s state-of-the-art refining complex is specifically designed to efficiently process high sulfur heavy crude oil, proving to be extremely economically beneficial. Although currently Russia and the United Arab Emirates (UAE) still remain India’s top two crude oil suppliers, Venezuela’s rapid return to the third position has proved that India is ready to go to any extent for its energy security amid the changing market and the sanctions game.