Indian imports of oil from Venezuela have fallen to their lowest levels in over half a decade, shipping and industry data showed, as a severe economic and political crisis hits crude output in the South American OPEC member.
India’s oil imports from Venezuela averaged around 300,000 barrels per day (bbl/d) between November 2017 and February 2018, a drop of about 20% from the same period a year earlier and the lowest such level since 2012, according to data from shipping sources and industry.
The sources declined to be identified as they were not authorized to speak with media.
Venezuela’s oil production plunged to the lowest in decades last year, with the country racked by quadruple-digit inflation, a lack of hard currency and a crippling recession.
The five-year average of Venezuelan crude oil to India is around 440,000 bbl/d, the shipping and industry data showed.
India’s oil supplies continue to be dominated by Middle East members from OPEC, with Iraq and Saudi Arabia prominent.
Key for Venezuela’s drop-off in shipments to India are supply obligations to other countries which, amid its overall declining output, leave fewer cargoes available for sale elsewhere.
“Venezuela is obliged to supply barrels to China and Russia to pay back debts, so not too much is left for others, mainly India,” Ehsan Ul-Haq, director of crude oil and refined products at consultancy Resource Economist, said.
The sharp Venezuelan declines to India mark a turn-around of a previous trend.
Venezuelan oil shipments to India surged from May 2012, when supplies from Iran hit insurance and banking hurdles caused by western sanctions against Tehran’s nuclear program.
However, New Delhi boosted purchases from Tehran after the lifting of sanctions in 2016, while a destructive cocktail of insufficient investments, payment delays to suppliers, potential U.S. sanctions and a brain drain have hammered Venezuela’s oil industry.
“Why should India buy oil from a country which is too far [away]? ... Plenty of oil is easily available from nearby nations like Iraq and Iran,” Haq said.
Comments from executive contrast with company’s previous statements.
Iran vows to continue to export oil, but statistics indicate economic pressure.
Oil fell further from 2019 highs on March 22, but was set for a third straight week of gains due to supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela.