Cheap Venezuelan oil to India turns costlier as traders eat into margins

India is losing access to its cheapest crude oil grade because of high margins charged by traders offering partially sanctioned Venezuelan oil, reducing the value of the commodity for Indian refiners, industry sources and officials told Business Standard.

- S DINAKAR

India is losing access to its cheapest crude oil grade because of high margins charged by traders offering partially sanctioned Venezuelan oil, reducing the value of the commodity for Indian refiners, industry sources and officials told Business Standard.

Venezuelan oil played an important role in the past in boosting refining margins. Traders reselling Venezuelan crude oil to India are eating into the generous discounts offered by Venezuelan state-oil company PDVSA earlier this year, Indian officials said.

Traders are now retaining margins of $8-10/barrel, refining sources said. Venezuelan oil delivered to India was cheaper by $12.5 per barrel in September compared to Brent crude oil. That compared to a discount of as much as $20/barrel in February and March.

State-run refiners purchased Venezuelan oil in November via Vitol, a leading oil trader, Reuters reported.

As a result, Venezuelan import in terms of quantity in the past few months has not matched the early 2024 levels, the ship-tracking data show and officials say. India imported Venezuelan crude oil of 132,000 barrels per day (bpd) in November, less than 3 per cent of the total oil import, compared to nil in October and 65,000 bpd in September. That compares to 175,000 bpd and 154,000 bpd in February and March, respectively.

India bought a record 425,000 bpd of Venezuelan oil in 2016.