India Explores Oil Source Diversification Amidst High Prices and Low Imports

By IndraStra Global News Team

Cover Image Attribute: Indian Oil's Panipat Refinery in Haryana, Northern India

 India is actively contemplating diversifying its oil procurement in response to declining crude imports caused by soaring global oil prices, with a potential revival of trade with Venezuela in the near future. The country's crude imports hit a four-month low in September, falling by 6.9% to 17.42 million metric tons (4.3 million barrels per day), according to Petroleum Planning and Analysis Cell data.
Petroleum Minister Hardeep Singh Puri emphasized the positive aspect of increased oil supplies, stating, "It is always good when more supplies come to the market. We will buy from wherever we can get cheaper oil." The decline in crude imports for the past four months has been attributed to elevated crude prices and reduced domestic demand, influenced by seasonal factors like the monsoon.
Despite the recent downturn, analysts anticipate a recovery in India's crude imports during the last quarter of the year, driven by heightened demand associated with the country's festive season, which is Asia's third-largest economy.
Government officials from the oil ministry revealed that India has been actively diversifying its sources of crude oil, importing from as many as 39 nations. The potential inclusion of Venezuela as a supplier is being considered, with a senior oil ministry official stating, "We are open to sourcing crude from any country, including Venezuela, at a reasonable price."
The recent easing of oil, trade, and financial sanctions on Venezuela by the US Department of the Treasury has opened up the possibility for US oil companies to explore and invest in Venezuela, potentially leading to increased oil exports. India, which imported approximately 300,000 barrels per day of Venezuelan crude from 2017 to 2019, primarily through private refiners like Reliance Industries and Nayara Energy, could once again become a significant buyer.
However, Indian government officials have emphasized that any future crude imports from Venezuela would be contingent on the country's policy related to energy security. The immediate prospect of a substantial flow of Venezuelan crude to India remains to be determined, especially considering the challenges Venezuela's state-run PDVSA faces in raising its production capacity due to decades of underinvestment.
In the meantime, Asian refiners, including those in India and China, remain confident about their oil supplies. Russia has emerged as a key supplier, with crude flows reaching 1.8 million barrels daily over January-September, accounting for 38% of India's total oil imports. This marks a significant increase from 11.2% during the same period in the previous year, according to S&P Global.
October saw a 5.5% month-on-month rise in India's oil demand, reaching 19.26 million metric tons (4.9 million barrels per day), as economic activity improved with the waning of the monsoon rains. Analysts attribute this uptick to increased mobility, robust industrial and construction activities, and the onset of the winter season.
Looking ahead, India's oil consumption is projected to grow, reaching 5.2 million barrels per day in 2023 and 5.3 million barrels per day in 2024, according to forecasts by S&P Global. The dynamic landscape of global oil markets and India's strategic approach to diversification will continue to shape the nation's energy security policies in the coming years. 
With reporting by S&P Global Commodity Insights

IndraStra Global is now available on
Apple News, Google News, Feedly, Flipboard, and  WhatsApp Channel

COPYRIGHT: This article is published under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. https://creativecommons.org/licenses/by-nc-nd/4.0/

REPUBLISH: Republish our articles online or in print for free if you follow these guidelines. https://www.indrastra.com/p/republish-us.html