India stands at an energy crossroads. For years, discounted Russian crude has powered its refineries and kept fuel prices stable. But with growing geopolitical pressure to reduce reliance on Moscow, Indian refiners are quietly exploring alternatives—and one controversial option is making a comeback: Venezuelan oil.
Reliance Industries, India’s largest private refiner, has confirmed it’s open to resuming purchases of Venezuelan crude—but only if non-US buyers get regulatory clarity from Washington. Other state-owned giants like Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Limited (HPCL) are echoing the same cautious stance .
Table of Contents
- Why Venezuelan Oil Is Back on India’s Radar
- Reliance and Indian Refiners Await US Clarity
- The Shadow of US Sanctions
- How Venezuelan Crude Compares to Russian Oil
- Geopolitical Stakes for India
- What Happens Next?
Why Venezuelan Oil Is Back on India’s Radar
Just a few years ago, Venezuela was a top supplier of heavy sour crude to Indian refiners. Its oil is ideal for complex refineries like Reliance’s Jamnagar facility, which can process low-cost, high-sulfur grades into high-value products like diesel and jet fuel.
But US sanctions imposed in 2019 effectively cut off most international trade with Venezuela’s state-owned oil company, PDVSA. Indian imports plummeted from over 300,000 barrels per day (bpd) in 2018 to near zero by 2020 .
Now, with Russia facing its own mounting Western restrictions—and India under subtle diplomatic pressure to diversify—Caracas is looking like a viable Plan B. The potential return of Venezuelan oil isn’t just about price; it’s about refining compatibility and long-term supply security.
Reliance and Indian Refiners Await US Clarity
In a carefully worded statement, Reliance Industries said it would “consider resuming purchases of Venezuelan crude oil, subject to clarity on permissions for non-US buyers” . This diplomatic phrasing underscores a critical reality: even though India isn’t bound by US law, American secondary sanctions can still freeze global transactions involving sanctioned entities.
State refiners are equally cautious:
- Indian Oil Corp (IOC): Open to buying if “regulatory environment permits.”
- Hindustan Petroleum (HPCL): Monitoring the situation but no immediate plans.
- Bharat Petroleum (BPCL): Has not commented publicly but historically sourced Venezuelan grades.
This collective hesitation highlights how deeply US foreign policy influences global energy flows—even for nations like India that maintain strategic autonomy.
The Shadow of US Sanctions
The Biden administration has offered limited sanctions relief to Venezuela in exchange for democratic reforms, including allowing Chevron to resume limited operations in 2022 . However, these waivers explicitly exclude non-US companies unless separately authorized.
For Indian refiners, the risk is real. Any transaction routed through the US financial system—or involving US-linked insurers, shipping firms, or banks—could trigger penalties. That’s why Reliance and others are demanding explicit assurances before re-engaging.
As one energy analyst noted, “It’s not just about buying oil—it’s about who handles the payment, the cargo, and the insurance. One misstep, and your entire supply chain gets frozen.”
How Venezuelan Crude Compares to Russian Oil
Both Venezuelan and Russian crudes are heavy and sour, making them attractive to India’s advanced refineries. But there are key differences:
| Factor | Venezuelan Crude | Russian Crude (ESPO) |
|---|---|---|
| Type | Extra-heavy, high sulfur | Medium-heavy, moderate sulfur |
| Price Discount | Potentially deep (if sanctions ease) | Currently ~$10–15/bbl below Brent |
| Logistics | Longer voyage (Atlantic crossing) | Shorter route via Suez or Arctic |
| Political Risk | High (sanctions, instability) | High (war, export caps) |
While Russian oil remains cheaper and logistically easier today, its future is uncertain due to EU price caps and potential new G7 measures. Venezuelan oil could offer a hedge—if the legal fog lifts.
Geopolitical Stakes for India
India walks a tightrope. On one hand, it needs affordable energy to fuel its $4 trillion economy. On the other, it values its strategic partnership with the United States, especially amid rising tensions with China.
Buying Venezuelan oil without US approval could strain that relationship. Yet, refusing to diversify might leave India vulnerable if Russian supply falters. This dilemma reflects a broader trend: emerging economies are increasingly caught between competing great-power blocs, forced to make high-stakes energy choices with global consequences.
What Happens Next?
All eyes are now on Washington. If the US extends sanctions waivers to include non-American buyers—or issues country-specific licenses—India could quickly revive its Venezuelan imports. Analysts estimate that within 3–6 months, refiners like Reliance could ramp up purchases to 150,000–200,000 bpd.
Until then, expect cautious diplomacy and quiet contingency planning. As one industry insider put it, “We’re not saying yes—but we’re definitely not saying no.”
Summary
Reliance Industries and other Indian refiners are seriously considering a return to Venezuelan oil as a strategic alternative to Russian crude. However, their hands are tied until the US provides clear regulatory guidance for non-American buyers. This situation underscores India’s delicate balancing act between energy security and geopolitical alignment in an increasingly fragmented global order.
Sources
- Times of India: Will Reliance buy Venezuelan oil? ‘Await clarity on non-US buyers’ – here’s what it said
- U.S. Department of Treasury: General License Authorizing Limited Transactions Related to Petroleum and Petrochemical Products Involving Petróleos de Venezuela, S.A.
- International Energy Agency (IEA): India Energy Outlook 2024
- [INTERNAL_LINK:india-russian-oil-imports]
- [INTERNAL_LINK:us-sanctions-global-energy-markets]