What will India gain if it buys oil from Venezuela, not Russia? Savings of $3 bn, says SBI research

India’s crude oil import technique might be at an inflection level as a brand new analysis report by State Financial institution of India Analysis means that shifting part of oil sourcing from Russia to Venezuelan heavy crude might decrease the nation’s annual gas import invoice by almost $3 billion beneath beneficial pricing situations.

The report traces how India’s dependence on Russian crude surged after 2020, accelerating sharply following Western sanctions on Moscow after its invasion of Ukraine  in February 2022.

With Russian oil capped at USD 60 per barrel, India turned to discounted provides to safeguard vitality safety. In consequence, Russia’s share in India’s crude imports jumped to 35.1 per cent in FY25, making it the nation’s largest oil provider.

Nonetheless, SBI notes that the long-term success of any new commerce or sourcing technique hinges on India diversifying away from extreme dependence on a single provider.

The report highlights Venezuelan heavy crude, significantly the Merey-16 grade, as a viable various, offered it’s out there at a reduction of USD 10–12 per barrel. Such a reduction, SBI says, could be adequate to neutralise the present benefit loved by Russian crude and guarantee industrial viability for Indian refiners.

At current, Venezuelan heavy crude is buying and selling at round USD 51 per barrel, based on OilPrice knowledge cited within the report. Whereas Venezuela is geographically a lot farther from India—entailing delivery distances roughly 5 instances these from the Center East and about twice these from Russia the report argues that aggressive pricing might offset increased freight, insurance coverage, and time-related prices.

SBI’s evaluation underscores that substituting Russian crude with Venezuelan barrels carries clear positives for the home economic system. Each public sector and personal refineries in India are able to processing heavy crude and may gain advantage from the related reductions with out triggering home inflation, even when the Russian low cost is partially sacrificed.

Utilizing a “brute pressure state of affairs” that preserves historic traits in India’s import basket, SBI modelled a scenario the place Russian crude imports are diminished to zero and totally changed by Venezuelan crude. Beneath this assumption, the evaluation estimates potential financial savings of roughly USD 3 billion yearly.

The report additionally locations the doable shift in a broader diversification context. Other than Russia, India historically sources crude from Iraq, Saudi Arabia, and the UAE beneath annual contracts, with flexibility to raise extra volumes month-to-month.

For the reason that imposition of sanctions on Russia, Indian refiners have additionally expanded purchases from the USA, West Africa and Azerbaijan. General, India now imports crude from almost 40 nations, with new provide rising from Guyana, Brazil, and Canada.

That mentioned, SBI cautions that the economics of Venezuelan crude will stay delicate to world geopolitics. Any easing of hostilities in Ukraine might compress the deep reductions at the moment supplied by Russian oil, narrowing the relative benefit of Venezuelan provides.

In consequence, the report concludes that India’s future crude import basket is more likely to evolve by means of a dynamic transition matrix, mixing provides from Russia, Venezuela, the Center East, and different areas primarily based on worth reductions, logistics, and refinery compatibility.