Reliance Industries has got the US nod to import crude oil from Venezuela. ONGC has also applied for a waiver to buy crude oil from Venezuela! It is quite possible that ONGC will also get a similar nod. It should be noted that Reliance Industries is the second largest buyer of crude oil from Venezuela.
This decision of the USA will increase India's access to cheap crude oil. I am sure that India's strong relationship with Russia, increasing share of Russian crude oil in Indian basket and the recent visit of Indian Prime Minister Narendra Modi to Russia which was widely circulated in the world media by the Russian state media must have played a significant role in this decision. The US wants India to cut its crude oil import from Russia. So India must have argued that until and unless India has access to other cheap alternatives, how could India cut its crude oil imports from Russia? The US must have agreed and nodded to the application of Reliance Industries for waiver to enable India to explore more and perhaps better alternatives than Russia. It must be noted that the US had imposed sanctions in 2019. This was the time when India’s crude oil import from Russia started increasing which had increased to 40% of the total Indian crude oil basket!
This decision of the US will have a multifaceted positive impact on India. It will help India in bringing down its dependence on Middle East crude oil. The share of Middle East crude oil in the Indian basket is still significantly very high at about 50% of the total basket. So this new avenue will help India to diversify its crude import basket. Along with the diversification benefit, India will gain huge bargaining power against its crude oil trading partners.
Direct crude oil import from Venezuela will significantly increase the bargaining power of India and both Russia and the Middle East along with other crude oil trading countries would be ready to offer oil at more favorable terms to India.
Rajeev K Upadhyay
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